Can moving power north fix Britain's economy?
Number 10 north will be the nerve centre of a rewired Britain.
That will take a lot of effort and it's still not dealing with the bigger, gnarlier issues.
It's World Business Report from the BBC World Service.
I'm Sam Fenwick.
Britain's likely next prime minister sets out his economic plans, and it starts with taking power away from London.
America's top court blocks Donald Trump from sacking a governor of the Federal Reserve.
And while everyone else in media is merging to get bigger, Comcast is breaking itself in two.
So in three weeks, Britain is likely to have a new prime minister.
And outside the UK, his name probably means little.
Andy Burnham, a cabinet minister under both Tony Blair and Gordon Brown until in 2017.
He left Westminster to run Greater Manchester, a big city region in England's north.
Now, Sir Keir Starmer is standing down and Mr Burnham is the frontrunner to replace him.
Unchallenged, he could be in Downing Street by the 20th of July.
So today, on Monday, he set out his economic plans not in London but in Manchester, not very far from where I am sitting now.
His pitch... spread growth beyond the capital and start where he's standing.
The change will be the biggest change in our lifetimes to the way the country is run.
We will create a more streamlined state with a clearer purpose to power up all parts of the country and put a laser-like focus on growth and regeneration.
Good growth.
The change will be driven through the Prime Minister's office in an extended operation based here in Manchester.
So let's talk to Fiona Sincotta, Senior Market Analyst at StoneX.
She is here in the UK.
Good growth then.
Based in Manchester is the promise.
It got a round of applause.
He's told the city that he'll stick with the government's borrowing rules.
Now, can he spend money across the UK, but also keep that promise of those fiscal rules?
Does one of them have to give, do you think?
Well, it's definitely going to be a challenge because, I mean, the UK is a deeply centralised economy and London and the South East are actually the only regions that generate more tax than they spend.
And so that just, I think, really highlights the extent of the challenge that Burnham faces.
So you know, it does mean that This would have to be quite a slow process and a gradual process targeted very, very much at the places that sort of have the greatest capacity to deliver.
Pretty much a bottom up approach, I would say.
But I think it does feel that you know, given the fiscal constraints that there are, this may not be able to achieve rapidly what he would need to achieve in the time.
Well, stay with us Fiona, because the real test of all this isn't on the trading screens that you've been looking at all day.
It's whether it changes anything for businesses actually trying to grow.
Now, the main plank of Andy Burnham's economic plan is this word devolution.
For decades, power in Britain has been focused in London.
Whitehall decides how money is spent, what gets built and where it gets built.
Devolution means handing some of that to the regions, to local mayors and councils, to the people who know their own patch.
Andy Burnham's bet is that decisions made closer to home will grow the economy faster than the ones made hundreds of miles away.
He calls it rewired Britain.
It will only be based here.
The job of Number 10 North will be to make power flow into the Midlands, into the South West, into the east of England and yes, into London, as I said before, as much as into the northeast Yorkshire and the Humber and here in the northwest.
It will be about offering new opportunities to extend evolution in Scotland, Wales and Northern Ireland by taking power deeper down.
Now get this, number 10 North will be the nerve centre of a rewired Britain.
Well, there you go.
It's a good line, isn't it?
And it got another round of applause.
But does it reach small businesses under the railway arches in Manchester?
Hip Pop is a soft drinks company based in Manchester.
Emma Thackeray started it six years ago.
I asked her if her business has benefited from devolution.
We've received funding support, financial support from the Greater Manchester Combined Authority to develop that manufacturing side of the business.
So that's money that has helped our business grow and has come about as a result of devolution.
How else do you see Andy Burnham's Manchester kind of helping businesses in and around the North West area?
Well, I think he has continued from a foundation that had already been set up.
He's managed to continue the progress.
He's managed to communicate the benefits very effectively.
So I think the positivity, the buzz about Manchesterism definitely helps to increase confidence in the city.
Some of the sort of indirect benefits we've seen are the foreign investment that's come into the city.
There's definitely a real pull, a gravitational pull to stay in the city.
So we've got three universities, but students stay here.
That talent pool is fantastic and really important to a brand like us when we're trying to compete with a lot of brands that are based in London and the southeast.
And do you think that that can be done on a large scale across the rest of the UK?
I think perhaps it can be in cities and a lot of cities have got mayors already how that translates perhaps in a more coastal area that doesn't have the same economic engine already.
There devolution sounds very positive and sounds like it could go further than what we've got in Manchester.
However, that will take a lot of organisation and a lot of effort to coordinate and it's still not dealing with the bigger, gnarlier issues to do with, you know, energy policy, industrial policy, welfare reform taxation, all those big national levers that he will have to pull.
That's Emma Thackeray there, a business owner in Manchester.
Fiona Sincotta is still with us and also joining us from the US.
It's Peter Jankowskis from Arbor Research.
He's in Chicago.
Fiona, you've heard there from Emma a business.
She's not sure if the Manchester model can be repeated across the UK.
What do you think investors might be thinking of what Andy Burnham has laid out today?
Well, I think, I mean, the speech was sort of quite vibe heavy and quite light on details.
But at the same time, because there was this sense that he's going to stick to fiscal rules, that has calmed the markets a little bit.
In fact, you know, the reaction that we've seen from the pound was actually positive.
It rose against the US dollar and it rose against the euro.
We've also seen the 10-year gilt yield, so that's the cost for government borrowing actually fall lower.
So there is a sense that we're sort of hearing the right things.
But also it's worth noting that sort of the bigger picture is also encouraging in the sense that we've seen oil prices falling, which has also sort of been helping those borrowing costs come down for the government as well.
But I think a clean succession and this sort of idea of sticking to the fiscal rules is really what's going to be essential for the markets to stay calm when Andy if Andy Burnham does take power in early July.
Peter from a US markets desk.
Does a plan to rewire how Britain is governed make international investors nervous or will they be flocking, do you think, to the shores to invest their cash here?
Well, I think, echoing the prior guests, that the currency markets are certainly giving a signal that investors worldwide are somewhat relieved by this, whether from the standpoint that they expect it will work, or whether they expected something more far-reaching and are happy that it wasn't quite as aggressive a plan.
It's always hard to sort that out.
Mr. Burnham was not known, apparently, to your president, Donald Trump.
Last week, we saw some clips on social media saying that he didn't know who he was.
Do you think he knows who he is now?
What do you think he'll make of what's been said today?
Well, I'm sure he will get a thorough briefing from those around him and he'll decide to address that, as he often does, whether he thinks that he can work with Mr Burnham or he chooses to disparage him.
It's always hard to say up front which way he's going to go.
Fiona, we'll just give the final word to you on this.
Do you think, is it an exciting time, do you think, for the UK economy, this kind of idea of growth?
I mean, lots of politicians talk about growth, don't they?
But it's harder to actually get it than talk about it.
That's completely true.
And I mean this is definitely not the first time that we've sort of heard about houses that are going to be built, growth which is going to come, the cost of living that's going to come down.
We've definitely heard it all before.
And I think We've not heard that much on how Burnham actually will implement his vision.
I think we've yet to really find that out.
And we've also still got quite a few weeks to wait until we find out who the chancellor will be.
And I think that's going to be sort of really key as to how the markets will react thereafter.
Fiona Sincotta, thank you very much for joining us today on the programme.
Fiona's from StoneX.
And Peter will stay with us because we will talk to him throughout.
Well, the US President, Donald Trump, has made no secret of what he wants from the Federal Reserve lower interest rates and the people to deliver them.
On Monday, though, the Supreme Court told him that he can't sack the Fed governor, Lisa Cook.
Not at least, at least not yet.
But the same court also handed in more power over other parts of the US government.
Our New York business correspondent, Michelle Fleury, has been following the developments.
OK.
So by a five to four ruling, the justices essentially blocked the Trump administration's attempt to remove Governor Lisa Cook from the Federal Reserve.
So she can stay on the Fed board while her case proceeds in the lower courts.
And this all stems from a case that was brought by the Justice Department accusing her, alleging that she committed mortgage fraud, claims she denied.
In fact, she has always asserted that this was just fraud, a pretext to get rid of her because she was not amenable when it came to lowering interest rates.
But right now, the Federal Reserve's independence essentially left intact by this decision.
So, as you say, the court drew a line around the Fed, specifically protected it, but they did loosen rules elsewhere.
Explain what happened there.
Yeah, so there was a separate case involving a regulatory body and it leaned heavily on a precedent in which Congress essentially insulated staff from political influence, from the impact of that.
But that has been struck down, and what it essentially means is that now the heads of these agencies can potentially be removed much more easily.
It's expanding the powers of the Trump administration.
And it's something they've pushed for for a while saying that the president should have unfettered authority over huge swathes of the government.
We're talking agencies that maybe regulate things like data.
It can be competition policy, so it could have an impact going forward, certainly for companies who are considering merger deals, things like that.
It's not the sexy part of things.
It doesn't grab as many headlines, but it is a significant decision.
People might be wondering why they made Well, I think if you read through you know 80 plus pages the decision today from the Supreme Court, and certainly on the Federal Reserve.
I mean they talk about the unique status of the Supreme Court of the central bank that it just meant that it should be treated differently and that the justifications being presented by the government were simply not strong enough.
Now you know you listen to some experts.
They'll say well, that doesn't actually prevent the administration from coming up with future challenges that may still lie ahead.
But at least for today, it preserves the independence of the Federal Reserve, even as it expands the power of the US president in other areas.
That was the BBC's North America business correspondent, Michelle Fleury.
And it's not just the Fed keeping investors busy.
The other number on every trading desk today is the price of oil.
It's been doing something rather odd.
There have been attacks between American and Iranian missiles being launched.
Oil strikes over the Strait of Hormuz over the weekend.
Now, normally that kind of action would send prices through the roof, but instead oil has fallen.
Peter Jankowski still with us.
What's going on?
Are the markets reading something into this that the headlines aren't?
Well, I think the markets are definitely that.
Certainly we've had a good deal of movement getting oil out of the Strait even prior to the agreement being reached.
That's probably reduced the short-term pressures that otherwise would have driven them up.
And I think there is some optimism that a longer-term agreement will be struck as well.
But I think the primary force is the fact that oil has actually been moving through the Strait as well as through other channels, and that has lessened the pressures on price.
So there is sort of oil in the system now, which there wasn't before, because it is all there ready, waiting to get out, isn't it?
It's not like there's been a shortage of the actual stuff coming out of the ground.
That's correct.
It's all just been sitting there waiting and waiting for an opportunity to get past Iran and its drones.
And there are talks tomorrow, we're told, on Tuesday between the US and Iran in Doha.
What could the outcome of those talks be?
Could they potentially, depending on the outcome of them, flip it back sharply the other way?
Certainly possible, though I think both sides have an incentive to reach agreement on something.
Certainly Iran's economy is in dire straits.
They want to be able to continue to generate revenue. for their economy.
And on the other side of it, of course, we have President Trump, with the midterm elections approaching, wanting to avoid additional escalation and return to the bombing.
Okay, Peter, we'll come and talk to you again in just a moment.
Stay there.
You are listening to World Business Report from the BBC World Service with me, Sam Fenwick.
Now, since the war in Gaza began, most of its infrastructure has now been destroyed by Israel.
The test to rebuild has been estimated by the United Nations as costing 70 billion US dollars.
Despite facing extreme difficulties, people are still trying to run businesses and make a livelihood.
In Gaza, everything is destroyed.
If I stay in Gaza, they will build Gaza in 10 years.
Maybe they need 10 years or 15 years to rebuild Gaza.
So what I will make in the 15 years here in Gaza...
Just looking for good place and looking for good food and everything is hard here.
So maybe I will return after that hear more from that report on how businesses are trying to overcome those challenges on business daily at bbccom or search for business daily wherever you get your bbc podcasts.
Now here's the question hanging over the media business right now.
Get bigger or break up?
Almost everyone has chosen to get bigger.
Warner Brothers and Paramount are merging.
The whole industry is chasing the scale to take on Netflix.
But today on Monday, Comcast went the other way.
The company which owns NBC Universal's film studios, the theme parks and Sky here in the UK, says it's going to split into two.
The television and film side spun off into one business.
The broadband and the phone lines kept in another business.
Well, Wall Street loved the news.
The shares jumped more than 20%.
Luke Stillman is with us now.
He's the managing director at the advertising and media consultancy Madison & Wall.
So everyone in the industry seems to be merging to get bigger.
So why are Comcast doing the opposite, breaking itself up?
Well, this is the end of the idea that there are synergies between the distribution business, the broadband and cable business and the content.
AT&T, Time Warner didn't work.
Now Comcast is breaking apart, and this just speaks to the added competition coming from big digital giants like Apple and Amazon, with near unlimited budgets and, you know, treating content as a marketing expense rather than for business.
So Brian Roberts, Comcast's co-CEO, has said that this is quote, absolutely not about setting up for future deals.
Some have suggested that that might be a thou doth protest too much type move.
It is absolutely about setting up for future deals.
They can't say so because their tax and regulatory implications of saying that.
But look at the reaction from Charter, which was up hugely today on the expectation of a deal with Comcast.
And splitting NBC off gives a lot more flexibility to buy or merge with media assets in the future.
But he also was saying that the two companies would, by splitting up, you would unlock more entrepreneurial management approach for each business.
So he is treading a specific line, but most of the industry thinks this is, what, bluff?
Is that what you call it?
Well, I think having a pure play, offering investors who want pure play, broadband and wireless, can own Comcast.
Investors who want pure play media can own NBC.
But certainly I think it's about setting up for future M&A because at least in the media space.
There needs to be more scale to compete with the digital giants.
And for the broadband distribution space, it's no longer about owning the content and the wires, but instead being a very efficient scaled utility company.
So what do you expect to see happen next and what might be the timeline on that?
Well, this split should take close to a year to fully happen.
So I think it'll be some time before we actually hear about potential future MA, but it's definitely in the pipeline.
And then in the meantime, we were saying that the shares jumped 20%.
Do you anticipate what might happen next with the share value?
I think the media space for a lot of the legacy broadcasters is so challenged right now that any changing of the status quo is likely seen in a positive light.
And so when the DOS settles, is this the moment, you think?
When cable companies admit that the future is the broadband pipe, not the programming, then
You say you have to sort of separate these two out.
You just can't have them together.
Certainly for the distribution companies.
The synergies with media were fairly small, maybe a little bit on the advertising front.
But overall we, just we never saw the promised benefits of combining the, the distribution pipes and the content.
So I think it's unlikely we'll see the same kind of combination in the future.
Now interestingly, the Sky business that is still going with the NBC side of the split does own distribution and content.
So it'll be interesting to see how things play out in the UK market.
Interesting.
Thank you very much.
Luke Stillman there from Madison and Wall speaking to us about that Comcast deal.
Now, six weeks ago, the story around the World Cup was all about empty hotel rooms.
And tourists being put off by visa queues, a strong dollar.
The cost of getting into the United States and maybe even the cost of those football tickets.
Football has been going, football's World Cup has been going for a couple of weeks now.
And the first hard numbers do tell a different story.
In the host cities, spending is up dramatically.
And it's the out-of-towners, the fans who've flown in, that are spending the most.
Here's Mark Prisinger.
He is the owner of Lion Sports Bar in Philadelphia.
So I am in Lions Sports Bar right now and it is very full, despite the fact that it was a noon game today.
There's lots of Brazil shirts in here.
There are lots of Japan shirts that are in here.
And the bar, everybody is just happy and having a good time watching the match.
I would say that, you know, the majority of people that are here right now do seem to be tourists, people from out of town, people visiting for you know different matches, or just want to be on vacation.
So we have seen very high increased spending.
In the United States, the largest sports day is the Super Bowl, American football.
What we are seeing here at Lions Sports Bar, though, is basically a Super Bowl every single day.
And we're seeing it multiple times a day.
That's the kind of volume that we're getting through here right now.
I would say the biggest thing is that we are running out of absolutely everything.
It is just insane how busy we have been every single day.
We are running out of cups.
We are running out of food.
We are running out of ports.
We're running out of Beer, we're running out of liquor.
Anything that you can imagine, we are absolutely running out of.
We're going through about 50 to 100 cases of beer per day, which is quite a high volume for us.
Imagine that, a bar running out of beer.
Well, David Tinsley is a senior economist at the Bank of America Institute and he's been going through the numbers of what people are spending and where.
Yeah, so when we look at Bank of America customer data, what we're seeing is that the customers who come into the cities to watch the games during the group stages their spending was particularly strong.
It was up around 17%.
But even those customers that live in the cities where the games are being played.
Their spending was up around 4.
Now, when we've looked at this data in the past for other sporting events and I'm just thinking right now of the Knicks in New York what we saw one of the key drivers was, as always, was food and drink spending.
So I'm guessing that's the case here as well.
You know these numbers are strong and they're particularly going to be strong around food drink, restaurant spending.
So you said out-of-town visitors are spending nearly 17% more than they were a year ago.
Why does that number matter?
Well, it matters to the local economies where the games are being played, because obviously these are the people that are bringing dollars into the cities and boosting the local economies.
So I think that's a particularly important number to see you know performing extremely well right now.
So six weeks ago, we were talking about empty hotels, weren't we?
Tourists staying away, empty stadiums because tickets were too expensive.
What your data suggests is that this is a sort of genuine turnaround.
I mean, I think that's fair.
I mean, I think quite often before these World Cups happen you do get those kind of stories around the potential for empty stadia etc.
And I think, just like those historical tournaments, the outturn has proved much better than those initial stories.
We are seeing strong interest, strong consumer spending, a lot of viewing on the TV.
So I think generally right now there has been a bit of a turnaround in that vibe if you like.
That was David Tinsley there from Bank of America Institute speaking to me a little earlier on.
That is all we have time for today on World Business Report.
Thank you very much for listening.
