Newscasts - Rachel Reeves speaks to media on sidelines of IMF 1

Veren

23/04/2025 16:50

Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_hzkfzmp3&referenceId=1_hzkfzmp3&pageId=Newscasts
Source: 'Reuters - Business videos'

Description: UK finance minister Rachel Reeves speaks to media on sidelines of IMF meetings in Washington.

Short Link: https://refini.tv/445v7ly

Video Transcript:

>> Please welcome Rachel Reeves, Chancellor of the Exchequer of the United Kingdom and Andrew Edgecliffe Johnson, CEO Editor at Semafor. >> Hello, welcome. Thank you very much for being here and thank you, particularly Chancellor for joining us. You're in charge of the world's sixth largest economy. You are also MP for Leeds West, an accomplished chess player, author of a book on female economist and you've worked in both the private sector for H Boss and as an economist for the Bank of England. I gather that job brought you here to Washington for a period 20 years ago to the British Embassy. So welcome back. >> Thank you very much, Andrew. It's great to be here. >> You're also the second longest serving G7 finance minister after less than a year in office. So you get to pull rank at the World Bank and IMF meetings this week. But let's talk about this interplay between London and Washington right now. UK economy that you oversee actually has just had some better than expected numbers. The February GDP figures were unexpectedly strong. But as you said, after Liberation Day, after President Trump announced his tariffs, the world has changed. So let's dig into how it's changed. I believe you're due to meet Treasury Secretary Bessent while you're here. Let's start with a trade deal the UK is hoping to strike with US. Right now, there's a 10% tariff on most imports from the UK, 25% tariff on imports of cars, which are the largest. UK is number one exports to this country. What cards does the UK hold going into this negotiation? >> There's certainly a deal to be done between the UK and the US. I very much understand the concerns that the US has about countries that run large persistent trade surpluses with them. The UK is not one of those countries. We have balanced trade between our two countries. There are a million British people working for American firms and there are million Americans working for British firms. Our economies are very closely intertwined and suddenly what we hear from the US administration is that they are keen to do a deal with the UK reflecting the closeness of that relationship. And as chancellor and this labor government very much believe in free trade, also believe it needs to be fair trade, and that's why we do understand some of the concerns that the United States has. We are willing to reduce trade barriers in the UK, those trade barriers that do exist, and we want to build on the relationship that we have. And then beyond tariffs, I think that there is much more that our two countries can do together, for example, a technology partnership, building on the close relationship we have on security and national defense. I think we can go a step further building on the strengths that both the UK and the US has in scientific enterprise in moving to that next stage of a technology partnership. Of course, we want to address the current challenges that we face with tariff parts. I think we should look beyond that as well. This isn't just about damage limitation. It's also about what the next step is. >> I want to get to that. Can you give us any more detail on those barriers you think the UK could remove? Where do you think there's room for compromise without damaging British industry? >> There are still tariffs both ways, even before Liberation Day in April between our countries. I would like to see those tariffs and non-tariff barriers reduce. I think that's in the interest of both our economies and because we're starting from a position of balanced trade. I think that can be a bilateral process between our two countries to remove those remaining trade barriers that do exist. And I think if we work on that basis, there is a deal to be done that will benefit industry both in the UK and the US, and jobs in both of our countries as well. >> So before we get to the potential opportunities you see, what are you having to do right now absent a trade deal or pending a trade deal to soften the potential blow to the UK economy if nothing is resolved? >> So even before the imposition of tariffs, the government in the UK very much focused on growth. When we were elected last July, we said the number one mission of the incoming government was to grow the economy and we are tackling some of the underlying structural reasons for why our economy has not achieved its full potential because despite the fact that we are a strong economy with huge strengths, we haven't grown or seen the productivity improvements over the last decade or so that we should have done. And so one by one, we are trying to push out the way those barriers to growth. So significant changes to our planning system to make it easier to build in Britain, whether that is the housing we need, but also maybe more substantially the digital infrastructure, the transport infrastructure, and the energy infrastructure reforming our regulatory system so that we're regulating for growth and not just risk. That's really important and we've changed the remit for some of our key regulators, including in financial services to regulate for growth and reduce the administrative costs of regulation. Also, substantial reforms to our capital markets particularly around how our pension system works so that we are driving the consolidation of pension funds, so we have a smaller number of bigger pension funds that can invest in scale in some of our start up and scale up businesses because we've got some fantastic spinouts from our brilliant universities in the UK, but the challenge they have is raising money in UK capital markets. So all of those reforms are about growing the economy and the message that I'm coming to Washington with this week, and that I'm going to other countries around the world with is Britain is open for business, open for trade, open for investment, and we are changing the way our economy works to really attract the brightest and the best and fast growing businesses. >> So we've got a lot of CEOs in the audience here today, and I'd like to dig into that. What is your message specifically to international business right now about the case for investing in the UK? They've got a lot of options. What is it about the UK under this government that is different? >> Well, let's go back to where you started really. The world has changed and we can see that all around us. What the UK is able to offer is political, financial, economic stability in a world that is very volatile at the moment. I think that is a huge plus for the UK and we are open as a country for business trade and investment. And we have taken on board as a new government less than a year in the feedback from businesses, both domestic and international investors about the things that hold back investment or delay investment on regulation. I flew out yesterday and I flew from Heathrow where many of you would have flown into and out of before. This government in January announced that we're backing a third runway at Heathrow. Heathrow are going to come forward before the summer with proposals for that third runway and we are determined within the five year term of this parliament to see that planning application granted and to see spades in the ground. So I think that's about the seriousness of the intent of this government. We're also working with business to join up two of the best universities in the world, Oxford and Cambridge with a new corridor between those two great cities to enable them to expand and grow, particularly in areas of tech and life sciences, which are huge UK strengths but again, held back by those small cities not being able to expand. So a train link between those cities connecting the towns and cities in between is about trying to attract more investment into Britain in some of those fast growing sectors that are highly competitive, but where the UK has huge strengths. >> Instantly, do you think what's going on here in the tension between the administration, the universities in the US is an opportunity for Britain's university sector? >> Britain already has, I think four of the top 10 universities in the world are in the UK. That's a huge strength, and alongside the US, we've got the best universities in the world with some of the best scientists and researchers, and we do want to attract talent, and I won't make any apology for that from countries around the world, including the US. >> Thank you for attracting more of that talent. >> I think some of it will happen organically. We have great strengths, particularly in some of those sectors, life sciences, clean energy, and the tech space as well. The capital markets reform that we are embarking on at the moment is also about helping some of those start up and scale up businesses coming out of our top universities stay in the UK because they can access finance in the UK. And we're working very closely with the London Stock Exchange group and with the financial conduct authority to help businesses list in the UK and make that more attractive. So there's a number of things we're doing both to hold on to homegrown talent but also attract that talent from around the world with a concierge service to help people who are looking to relocate to the UK and help our university secure some of that global talent. >> So what's your broader agenda at the World Bank IMF meetings this week beyond the US-UK negotiations? >> Well, obviously, this is the 80th anniversary of some of those institutions. And as governor of the International Monetary Fund, I want to strengthen those institutions. But this is an important week for me as Chancellor of the Exchequer to spend time with my counterparts from around the world in G7 and the G20, but also in the wider meetings. And rightly, there's a lot of focus on the trade deal between the UK and the US, and that is crucially important for all the reasons that I've already mentioned. But we were also elected on platform of resetting the relationship between the UK and the EU because we want to make it easier for Britain to trade with countries all around the world. We are close to finalizing an investment and trade agreement with India, one of the fastest growing economies in the world. And so this week is an opportunity to build on some of those links and set us up for those closer ties, which really sees Britain as a bridge between continents. We benefit from our time zone, our language, and our connections with countries around the world. One of the opportunities this week is to build on that. >> You've talked about making the UK a business hub for all of Europe. How fundamentally do you think is the tariff shock, the events of the last few months changed the UK's post Brexit relationship with the EU, and are you expecting much deeper integration from here? >> Yeah, so we left the European Union. It will be nine years ago this June that the British people voted to leave and that ship has sailed. We're outside the customs union, the single market. But we want to deepen and strengthen our trade relationships, but also our defense and security relationships with our European colleagues. And that's why we've got a summit between our countries on 19th of May to really remove some of those barriers that are making it difficult for businesses to trade. So looking at things like the veterinary agreement between our countries, the mutual recognition of standards, a number of areas where we think we can reduce some of those barriers. And it's all part of the vision really that we have for the UK economy, which is an open trading economy open to countries all around the world, where the best talent can come, where businesses can start, and scale up can access the finance that they need to grow and where businesses can also access the talent because of our great universities and education sector. So huge strengths in the UK economy. We're playing to those strengths acting in the national interest, but outward looking government perhaps in a world where there's less of that these days. >> Can I follow up on your point about the defense coordination with your European counterparts ahead of this summit in May, what's the conversation you're having about how to coordinate what looks like potentially quite a meaningful increase in defense spending across the UK and the EU? >> Yes. So we announced a just a couple of months ago now the biggest sustained increase in defense spending in the UK since the end of the Cold War, taking our defense spending up to 2.5% of GDP above the NATO 2% target. So that's a substantial increase. We are starting that this financial year with a 2.2 billion pound increase in defense spending this year with a particular focus on investing in defense innovation, so supporting particularly tech companies who want to enter the defense space. As a country, the UK has been one of the staunchest supporters of Ukraine and that support has involved a number of things, of course, direct financing, but also access to UK defense innovation and technology. And we want to build on some of those strengths and advances we've seen in the last three years to improve the availability of technology for our armed forces and also help British defense companies win contracts around the world, as other countries too are looking to increase their defense spending. And we want to do that in partnership with our European allies as well, because we all recognize the need to step up and better protect our own continent from the aggression of Russia. And in Europe, we can see that much more up front and close and personal than perhaps you can from the United States. But countries across Europe are looking to increase their defense spending. You see that in Germany, particularly in Poland, which of course is on the front line in Eastern Europe. And the UK want to play our full part, but not just going it alone, but working in partnership with European allies to get better value for money for the defense spending that we put in through a proper industrial strategy, standardization of procurement so that we are working in partnership because we have a shared objective in Europe. >> And how are you going to pay for it? >> We've reduced what we're spending on international development, and that was the right decision. So the increase in defense spending in the UK is fully funded by a commensurate reduction in our overseas development assistance. That was the right decision given the challenges that we face as a country. >> Going back to where we started, the growth agenda you came into, which I think was very well received by a lot of businesses, and then the initial months they were less certain that they were seeing the traction on it. What do you think has really fundamentally changed so far in your nine months or so in office in the UK economy when you look back at the economy inherited, where it stands now. >> Relentless focus on growth. So the previous government prime minister and chancellor were very much focused on tax and spend policies. We are relentlessly focused on pro growth policies. So whether it's the planning reform, the regulatory reform, the capital markets reform, but also all built on this platform of stability because stability has got to underpin any strategy for growth and the political, the fiscal, the financial stability that this government has bought, a big political majority. A mandate to grow the economy means I think that people can have confidence that we're going to deliver on this agenda, and we've got the political will and the political majority to deliver it. >> Great. Finally, you're going to be conducting any trade negotiations over a chessboard? >> Well, I might win some then. >> Well, I wish you luck this week. Thank you very much, Chancellor Reeves, for joining us today. >> Thank you. >> Please welcome Domenic Dell'Osso Jr, President and CEO of Expand Energy, and Charlie Gasparino, Senior Correspondent at Fox Business Network. >> Well, it's nice they saved me the introduction. >> It's good. >> Are we in a recession? >> I don't think so. We could be before long, but I don't think we are right now. >> Give us the dynamic. You can surmise a lot from the oil and gas markets. I always believe. It's a great macro indicator of the economy. What would you be looking at to suggest that we're heading that way. But we are heading that way. >> It's possible. I'm not all the way there yet. So I think you look for industrial activity, you look for demand for the more marginal parts of the energy demand cycle. Our company produces primarily natural gas. Right now, there's a big secular demand growth of natural gas out of the US because we are creating all this new export capacity. So if we're going to have a recession that's going to be a problem for natural gas in the US, it really has to be a massive worldwide recession that pushes down demand for gas in a way that's pretty hard to fathom. >> Although, you guys are an outlier a little bit in the sense that we do have demand that's baked in, keeps a floor on stuff because of AI and crypto, correct? >> Correct. There is a bit of a power demand. That part of energy demand is pretty inelastic. Electricity for residential, electricity for a lot of uses pretty inelastic. It becomes seasonal. There's a lot of incremental natural gas demand in the winter obviously, when it's colder. But that seasonality still is somewhat inelastic weather adjusted. >> How much capacity does AI and crypto add? Can you add it to your bottom line? Do you know where it is? >> Of course, we don't have the crystal ball. We'd like to think we do, but we don't. So let's put it into context this way. The US produces about 105 BCF a day of natural gas today, and we think that AI driven electricity demand will result in an incremental five ish BCF a day of demand growth for natural gas before the end of the decade. On the other hand, we think there's 15 BCF of growth coming from incremental export capacity for LNG. So the AI story is really important, but it's about a third the size of the LNG export story. >> Interesting. Tariffs impact you guys? >> They don't seem to be impacting us a lot at the moment. By the time you get gas on the water, it's pretty fungible. There's a lot of trading that happens. And again, you have each incremental molecule of gas that goes on the water is filling what is currently unmet demand in the world. And so there's just a huge shortage of energy that this incremental export capacity is filling. >> So you take China out of the mix, which at least as of yesterday, maybe today it's different. I've read the headlines. Let's just say they're out of the mix. How does that impact you guys? >> It really doesn't. So what'll happen is as cargoes get put on the water, they get traded. Each cargo of LNG that gets put on the water is likely to get traded anywhere from 6-10 times before it's created until it's actually delivered somewhere. And so all of that trading will allow for everyone to feel good about where they're buying gas from and where they're not. And you've already seen that cargoes that may have otherwise, gone to China are getting sold into Europe or other places. And so that trading happens and it becomes fungible. >> So you have the ultimate business. Everybody should buy your stock. You know what it says? >> I think so. >> Why is it trading below the analysts estimate? Someone's not buying it. >> Actually, I'd like that there's an analyst average that's higher than our stock price. I think that shows that there's expected growth. We within the last month hit an all time high for our stock and to then have target prices that are well in advance of that, I think it's pretty encouraging. And that's really about this secular growth for natural gas. We've just completed a merger in the last year. We took Chesapeake Energy and Southwestern Energy, created Expand. We're the largest natural gas producer in the United States. The demand growth for natural gas is really not debated, and so we will be a big beneficiary of that. We've taken a tremendous amount of costs out of the system with the synergies of this merger and we put ourselves in a really great position to benefit from all this demand growth. So we like the fact that there's an expectation of growing stock price. >> Or something is wrong. Is it saying something is wrong? >> I don't think it's saying anything's wrong. I think we are seeing that demand growth happen right now. It is occurring during 25, 26, 27. And so there is an expectation that we will be delivering more volumes to market at higher prices. Our cash flows are going up. >> I did a little research on you and to the person said you're an excellent CEO. I don't say that just off the top of my head. >> You didn't talk to very many people, I guess. >> No, I did. >> That's nice. >> You have a very good reputation as a great technical, great hands on CEO. How did you get here from being a banker? You initially sold your soul coming out of college and then you thought. >> Went through a recovery program. >> Etax. >> Etax. I joined the company 16 years ago, and our company has been through a tremendous amount of distress. I joined the Chesapeake Energy side of what is now Expand. Chesapeake Energy has played a really important role in the Shell development in the United States.