Up next in 10
Andy Burnham could be set to return to Parliament, where he would immediately be the frontrunner to become the next Prime Minister.
And, while Rachel Reeves might be breathing a brief sigh of relief this week as inflation held steady, there are signs that the worst is yet to come - with the full impacts of the war in Iran yet to be seen.
So, how would a new government handle these challenges? City AM Editor-in-Chief Christian May gives his thoughts.
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0:00
Welcome to the week in business with me,
0:01
Christian May. Last week we talked fair
0:04
bit about Andy Burnham and what it might
0:06
mean for the economy. So, probably only
0:08
fair today to talk a little bit about
0:11
somebody who will be at least among the
0:12
challenges we're told to the leadership
0:15
election and that's Wes Streeting who
0:17
gave a very interesting speech on the
0:19
economy here in the city earlier this
0:22
week. But before that, we'll just set
0:23
the scene because there's been quite a
0:25
lot of economic data released this week.
0:27
First up, inflation
0:29
held steady actually at around 2.8%
0:32
not as high as people had been
0:34
expecting. Economic consensus forecast
0:37
was that it was going to climb to about
0:38
3.1%.
0:40
The main reason why it didn't despite
0:43
some price hikes in certain areas not
0:44
least fuel and transport was because
0:47
of price reductions in food
0:50
which rather made me think that the
0:53
Chancellor owes an apology to
0:54
supermarkets or a more
0:56
sympathetic interpretation of that if I
0:59
was being sympathetic to the Chancellor
1:01
is that supermarkets listened to her
1:03
when she
1:04
wagged her finger and shouted at them
1:05
all about not price gouging and ripping
1:09
people off
1:10
with food prices. But actually
1:12
I'm not going to give the Chancellor any
1:13
credit for this.
1:14
One of the reasons why inflation is not
1:16
as high as it would otherwise be is
1:17
because of our incredibly competitive
1:19
and effective retail infrastructure.
1:21
Supermarkets have discounted, have kept
1:23
prices low. It's an extraordinary feat
1:26
and their ability to have done that and
1:28
the competition that has driven them to
1:30
do so over recent weeks and months
1:33
is why inflation is not as high as
1:35
otherwise would be. So, a little note
1:37
there for the Chancellor to consider
1:38
that the market works, competition works
1:40
and is doing its thing when it comes to
1:42
inflation.
1:43
It is going to climb almost undoubtedly.
1:46
Energy prices are going to have a bigger
1:48
role to play. Price cap comes up in
1:50
July.
1:51
It is good news of course on the whole
1:53
that peace appears to have
1:55
broken out between Iran and
1:59
the US and the markets and oil prices
2:02
have reacted as you would expect. So,
2:04
fingers crossed that although there is a
2:06
long tail to the crisis that we've
2:08
endured over the last few months, it's
2:11
not going to get worse over the next few
2:13
months.
2:14
But it it's certainly not pain-free and
2:15
not cost-free. So, that was inflation.
2:17
The other thing we heard today was on
2:18
the labor market.
2:20
Unemployment rate
2:22
actually down technically a little bit.
2:25
Um now, I think it was 4. It was 5.2%
2:29
now it's 4.8%. Looks okay. You got to
2:32
dig into those numbers.
2:33
One of the reasons
2:35
for that reduction in the official
2:37
unemployment rate is because of a rise
2:39
in the rate of inactivity. If you are
2:41
classed as economically inactive,
2:44
you are not seeking work. You are not
2:46
therefore contributing to the
2:48
unemployment rate. So, there has been a
2:49
rise in the number of people who are now
2:51
just inactive, economically inactive,
2:54
long-term sick or otherwise. Um and we
2:58
know that the number of payrolled
2:59
employees in this country has continued
3:01
to decline. Interestingly, looking at
3:03
the regional data, London has the
3:05
highest rate of unemployment, 6.6%
3:09
here in the capital.
3:10
And the labor market
3:12
is not in terribly good health. And that
3:16
is the context
3:18
where voters in Makerfield today have
3:21
gone to the polls. It's a by-election in
3:23
which Andy Burnham says change is
3:25
coming.
3:27
I was at Ascot yesterday and I didn't
3:29
quite break even on the day. But if I
3:31
wanted to have a bet on the outcome of
3:33
the Makerfield by-election, I'd probably
3:35
be on slightly safer territory than I
3:38
was
3:39
yesterday with the horses. Looks like
3:42
Andy Burnham is is probably going to win
3:44
it. And if he does win it, he's expected
3:46
to launch the leadership challenge to
3:48
the Prime Minister almost immediately.
3:50
Extraordinary situation of Keir Starmer
3:52
saying, "Well, I actually I would like
3:53
to offer Andy Burnham a job in my
3:55
cabinet. Andy Burnham has said,
3:58
"I don't want that job." So, that's
4:00
going to get pretty interesting pretty
4:01
quickly. But, as I mentioned, it was Wes
4:03
Streeting who I think gave the most
4:05
interesting intervention on Labour's
4:07
economic thinking or one of the ways in
4:10
which Labour could start to think again
4:12
about the economy. He gave a big speech,
4:14
former health secretary,
4:16
not expected to win against Andy Burnham
4:19
in a vote among the Labour Party
4:21
membership. And I would say that's a
4:23
shame.
4:25
Wes Streeting's speech is well worth
4:26
your time. It was really interesting. It
4:28
was intellectually coherent. It was a
4:31
very interesting response to Andy
4:33
Burnham. Andy Burnham who just wants to
4:34
write checks and say yes to things,
4:36
which is literally the job of a regional
4:38
mayor.
4:39
He also wants to nationalize and
4:40
subsidize, spend a lot of money that the
4:42
country doesn't have. He particularly
4:44
says that this country's been ravaged by
4:46
40 years of neoliberalism.
4:49
And to which Wes Streeting said this
4:51
week, "It's not as simple as that.
4:53
Actually, what you call neoliberalism,
4:55
these market dynamics,
4:57
have given this country some
4:59
extraordinary assets. It has led to some
5:01
difficulties. Growth has not been equal.
5:04
There have been some persistent problems
5:05
that we need to address. But, on the
5:07
whole,
5:08
the last 40 years have been a pretty
5:10
good story for this country."
5:12
>> [snorts]
5:12
>> Wes Streeting went on to say that
5:14
the Labour Party should not be squeamish
5:16
about capitalism and about competition.
5:18
And he was dead right when he said that
5:19
some of the problems that we face in
5:21
this country not because we have too
5:22
much competition, but because there's
5:24
not enough of it. And he pointed to some
5:26
concentrations of power in certain
5:28
sectors that I thought were were really
5:30
interesting. I don't agree with all of
5:31
his
5:32
diagnosis of the state of things. I I
5:34
don't agree with all of his
5:35
prescriptions for the future. I am
5:37
concerned about some of his plans for
5:38
the taxation of wealth. But, half of
5:41
that equation at least does catch my
5:42
interest where he says we we need to
5:44
stop taxing work as much.
5:46
That was very interesting. It was more
5:49
intellectually coherent and more
5:50
pro-growth
5:52
uh in a speech that lasted about 40
5:54
minutes than we have heard from Rachel
5:56
Reeves for the last 2 years. So, I think
5:58
it was
6:00
a very interesting account of where
6:02
Labour could go in its economic
6:03
thinking.
6:05
We have a piece in City A.M. today and
6:06
online about the city getting very
6:08
nervous about who Andy Burnham might
6:10
choose as his Chancellor. Well, my
6:13
opinion for what it's worth and I don't
6:16
think City A.M. endorsement is something
6:17
that many Labour Party leadership
6:18
candidates seek. Uh, Andy Burnham could
6:21
do a lot worse than to make Wes
6:22
Streeting his Chancellor. Anyway, next
6:25
time we speak, we'll know whether Andy
6:27
Burnham has won that election. We might
6:29
have a clearer sense of quite uh where
6:32
he goes from there. Uh, but the economy
6:34
continues to be in a pretty perilous
6:37
state. Certainly, at best, you would
6:39
describe it as utterly sub-optimal on
6:42
growth
6:43
uh in the labor market. Um, we'll get a
6:45
bit more thought from the Bank of
6:46
England later today on quite what their
6:49
assessment of the state of the economy
6:51
is. That's the conditions under which
6:53
Labour will now roll the dice and try
6:55
and shake things up. I hope that some of
6:57
Wes Streeting's thoughts make it into
6:59
whatever Labour and therefore our future
7:01
might look like. But, that's it from me
7:04
this week for the week in business. Stay
7:06
up-to-date and in the know on the City
7:07
A.M. app on our cityam.com and I'll see
7:09
you next week.
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