This BBC podcast is supported by ads outside the UK.
That is why I will resign. as leader of the Labour Party.
I swear by almighty God that I will be faithful and bear true allegiance to His Majesty King Charles.
It's World Business Report from the BBC World Service.
This is Andrew Peach.
On the way.
We'll look at what a new UK Prime Minister will mean for the world's fifth biggest economy.
Also today, with Cape Verde holding their own against Spain and Uruguay at the World Cup.
How many million dollars is that worth?
And we've tribute to the great US economist Alan Greenspan.
First, it was like something from British history centuries ago.
A rival leader from the northwest of England travelling to London to seize the crown.
Today, not two years since getting the job, the UK Prime Minister Keir Starmer announced he's standing down.
The question my party is asking now is whether I am best placed to lead us into the next general election.
Every decision I've taken has been about putting the country I love first.
That is why I will resign as leader of the Labour Party.
He'll likely be replaced in a few weeks by Andy Burnham, who was, until a few days ago, the Mayor of Manchester.
Now re-elected to Parliament and backed by hundreds of MPs from the governing Labour Party.
I swear by almighty God that I will be faithful and bear true allegiance to his majesty King Charles, his heirs and successors according to law.
So help me God.
So if that's how things play out, what will it mean for the world's fifth biggest economy?
I asked the former governor of the Bank of England, Lord Mervyn King, to be an effective leader, you need to have clear intellectual convictions as to what needs to be done.
I don't think we've seen that for a number of years now.
And it needs an overarching narrative to explain why very difficult decisions will have to be taken.
And I think that if people understand why there is this overall plan, which involves some difficulty in the short run,
We're doing this to make the British economy stronger, and that will be to the benefit of our grandchildren.
The immediate outlook is tough decisions to be made.
And I think it's too early to judge whether Andy Burnham, if he does become prime minister, will have a clear overall answer to all that.
And we need that because simply pretending that problems can be solved by not raising taxes and not cutting spending, it's just not going to work.
We've done nothing yet for defence spending.
There are many things which need to be done, which are simply at this stage just promises.
But I think Andy Burnham has a record of saying we must do something about some of these.
And a lot's been made of Sir Keir Starmer's perhaps lack of ability to shape a narrative and take the electorate with him on a path of potentially difficult decisions and hardship, as you say.
Do you think it's more than that, though?
What I'm picking up from you is a sense of a lack of economic coherence in what the government has been trying to do.
You need to have clear and deep intellectual convictions in order to get through the inevitable periods when there'll be squalls and problems, but to keep going in the right direction that you believe in.
And I think without that, then governments do get tossed around and they put forward proposals and they back off them and they change their minds.
We need leadership with deep intellectual convictions.
Now, that doesn't come necessarily just from one person.
It can come from a collective, a cabinet.
But each of them needs to have those convictions about what they're doing in their area.
One of the reasons why the last decade has been so difficult is that in each of the major offices and ministerial appointments in cabinet We've had massive turnover.
People do one year and move on to a different job.
You need to be in it for some considerable time to understand what needs to be done.
There are many other questions.
What do we do about defence?
What do we do about social care?
How are we going to deal with failing water companies, the railways?
What about the tax system?
What about the triple lock for pensioners?
What about the welfare system?
All of these things need to be looked at together in an overall view of yes, with this package as a whole.
People may lose some things in one area and gain it on the other.
The pension system could be sorted out.
There are many areas whereby looking at problems together.
It's possible to portray a narrative which says this is what we have to do.
It will take time.
You're not going to feel better off tomorrow.
But if we start on this programme now, then not only our children but our grandchildren will benefit from it, as opposed to our bequeathing them a large amount of national debt which they will have to pay taxes to service.
There'll be more from Lord King later in the programme.
Live now to Lord Karen Villamoria, Chair of the International Chamber of Commerce, United Kingdom.
Founder of the Cobra beer brand.
Thank you for being with us.
In his marking of his own homework, listing his achievements over the past two years, Keir Starmer talked about trade deals that his government has struck.
I know you've been involved in... in them to an extent.
Do you think that that is a big success?
You've got to look at the situation just based on what Mervyn King was saying just now.
A country like the UK is a great country.
It's one of the top six economies in the world with less than 1% of the world's population.
And regardless of everything, it's almost 10 years to the day tomorrow that the Brexit vote happened.
And we've had nothing but economic and political turmoil since then, with six prime ministers in 10 years.
The last time that happened was 250 years ago at the time of America's independence.
And now we have seven prime ministers in 10 years.
This is not good from an investment point of view, where people look at a country and they say, has it got a rule of law?
Has it got an independent judiciary?
Has it got an independent central bank?
Has it got a stable democracy?
We tick all those boxes.
Has it got stable politics?
We haven't had that.
So now we're craving certainty and business wants that certainty.
And when it comes to trade deals, we have had the.
In 2022, we rolled over 66 trade agreements from the European Union, including Canada, for example, to the uk, which we still have to this day, and then we started doing our own deals and uh, under the previous government, i remember being involved with the australian deal, the new zealand deal and then the india deal.
We started the negotiations in january 2022.
And it took three and a half years.
And last year in July, we signed the India Free Trade Agreement, which is one of our biggest trade deals ever in our history, with the fastest growing major economy in the world.
And that trade deal was done.
And since then, we've got the GCC agreement that's possibly going to be happening.
So we have been signing these deals under Keir Starmer's leadership.
And just to think about Andy Burnham, potentially the next prime minister and what's in his inbox.
I can see the Times newspaper in London reporting tonight.
He's going to do a big speech next week talking about reducing the UK's national debt and getting the cost of borrowing down.
As he tries to convince everyone he's got a credible economic plan of the sort Lord King was talking about.
Well, look at what we've had.
We had the previous government...
And a lot of the blame, by the way, goes to the previous government.
They're the ones who put up taxes to the highest level at the time.
They're the ones who had no growth.
And now we've had this government over the last two years with a huge majority, 174-seat majority.
They could have done big things.
And you cannot grow an economy, which is what they said they wanted to do, and with the right intentions.
You cannot grow an economy by putting up taxes and increasing spending and increasing borrowing.
You can only grow an economy by reducing taxes being more efficient in your public spending.
And we've got now, at the moment, the highest level of public spending, we've got the highest level of taxes in 80 years and we've got borrowing hitting 100 of GDP.
So this cannot go on.
So Andy Burnham has to hit this head on and say I've got to have the guts to enable this economy to grow.
I've got to listen to government.
And what's happened in the previous two years is...
Keir Starmer, by the way, is a very decent person.
I knew him when I was president of CBI in opposition.
I have nothing to say about him other than he's a very decent person with the right intentions.
But you've got to listen to business.
The U-turns, 15 U-turns.
Now, I say you would not have had to U-turn if you'd listened to us in the first place.
Lord Billimory, I have to leave it there.
I'm so sorry, but thank you very much indeed for your take on what's been going on.
I want to move to Colombia now for a minute or two.
The rightward shift in Latin American politics continues with...
Alvarado de la Espraya, winning a narrow win in Colombia's presidential election after pledging a military crackdown on illegal armed groups and drug trafficking there.
I will govern for all Colombians, for those who voted for me and for those who chose another candidate.
There will be no winners or losers.
There will be no reprisals, no persecution, because in a democracy there are no irreconcilable enemies.
It's really interesting.
The guy who's won here has got a very colourful business background.
Tell us.
He certainly has.
Yeah, he's a very distinct character.
So he's actually a high profile criminal defense lawyer, but he's also an entrepreneur as well.
So he's had various alcohol businesses, rum, whiskey.
He's had menswear lines as well, a Miami restaurant.
He's also a singer as well.
He sings opera and Latin American music and he's released albums.
So he's very, very different.
And his campaigning has reflected that as well.
It's important to say he's never held public office.
He's never been a politician before.
And that's exactly what people love about him.
He's an outsider.
So his campaign was quite unconventional as well.
So you saw his rallies, you'd have these like demonstrations. dancing AI tigers as well.
He had a catchy theme tune for his campaign bulletproof glass as well, because there was a lot of security concerns throughout the campaign.
And he's also known as the tiger, el tigre in Spanish.
And that's to reflect the kind of strength that he wants to project as the next presidential, as the next president.
I'm liking this out of AI Tigers, I have to say.
Now his pitch is basically about cuts and also security.
So management of the economy and security and linking those two things.
Exactly.
I mean, they're the two main economic pillars.
And the really interesting thing is that they were kind of everybody I was speaking to.
They were the real things that were top of everybody's concerns.
That's whether you wanted to vote for the left.
Even Cepeda, he is the continuation candidate, or he was, from Gustavo Petro's government.
And also then we had Abelardo de Espriella.
Now, it's very important to say there was an incredibly narrow margin between both of them.
There was only 1% difference.
Now, the difference is how people wanted these priorities actually delivered.
So with Evenser Peler, it was a continuation of more redistribution.
With Petro, he'd actually increased the minimum wage as well.
There was a lot of talk about equality.
And, in terms of security, it was negotiations with armed groups to try and bring peace to the country.
Now, Abelardo de Espriella wanted something completely, completely different.
He vowed to scrap negotiations with armed groups.
That was actually Gustavo Petro's flagship policy.
He vowed to come down hard on all of these armed groups.
Many of them were left over after the 2016 peace agreement with the FARC.
Build Bukele-style prisons as well.
Mega prisons.
And then in terms of the economy, yeah, he wanted to...
He wants to reduce the state.
So he wants it.
Not only Bukele he's taking it like drawing out of his playbook but also Javier Mele from Argentina.
So he wants to reduce the state by about 40%.
And then as well, increase growth by increasing investor confidence as well.
Same sort of thing we're seeing in Latin America.
Catherine, thank you very much.
This is World Business Report from the BBC World Service with Andrew Page.
We're off to Cape Verde now.
The talk of the World Cup.
The second smallest country to qualify 400000 people already getting draws with former winners like Spain and Uruguay.
It's Football Federation getting at least $12 million just for qualifying.
Rachel Wright has been to Cape Verde to hear more about the impact on its economy.
I'm at one of the many fan zones with big screens that have been set up throughout the city of Praia, and the excitement here is on another level.
We're just minutes away from the beginning of their first World Cup game ever against one of the tournament favourites Spain, and everyone is really excited.
I'm very confident because for the first time they will see Cape Verde playing such a big game like this.
How do you feel today?
I say that she feels very proud because Cape Verde already won.
It doesn't matter what happened there.
The Cape Verde team is known as the Blue Sharks, and it's the second smallest country in this year's World Cup.
Most of the squad are from the large diaspora.
That's probably why a country of less than 500000 people punches way above its weight and is qualified for the World Cup.
I'm with Paulino Diaz, who's one of the country's best-known economists and also a huge football fan.
Paulino, tell me, how does the country feel today?
I never saw something like this that we are witnessing today.
This feeling of pride, of unity will have a huge impact at the economic side.
I would say forever, perhaps because there will be a Cape Verde before today and a Cape Verde after today.
And of course, Cape Verde's economy is largely dependent on tourism.
I went to see Professor Manuel Electro-Ribero, who studied tourism in Cape Verde.
He's married to a Spanish woman, so the game is a particularly tense one for him.
There'll be no fight, and hopefully Cape Verde will win.
Do you think that's likely?
No, I don't think so.
I think just being there, we are winning already.
So given that Cape Verde is unlikely to win the World Cup, what are the plus points for it playing?
This is a great exposure for the country.
For example, a very popular influencer from South Korea travelled to Cape Verde after the country qualified for the World Cup.
To know this country that everyone is talking about these videos on YouTube.
It has almost 2 million views in two months.
You have very different islands on the archipelago.
Most of people visiting Cape Verde, they stay in the island of Sal and Boa Vista.
You see beaches there that you don't see anywhere in Europe.
But Cape Verde is not only those two islands.
We have, for example, the island of Santiago.
That's the biggest island in Cape Verde, where the government is located.
But also in this island, we have Cidade Velha, that means old town.
That was the first European urban settlement in the tropics.
I've come to the seafront in Ciudad Vella on the Cape Verde island of Santiago.
And I'm with Paulina Diaz again.
What are the short-term benefits that you think qualifying for the World Cup finals can have will have?
You know, for the first time, everyone in the world is talking about Cape Verde for free.
So everyone is trying to come to Cape Verde to know, who is that?
Who the hell is this Cape Verde?
This will attract, for sure, more investors to the tourism sector.
A third one is the increase in remittances.
Which is the money that Cape Verdeans in the diaspora send back from abroad to help their families here.
And it's a very important source of revenue for the economy of Cape Verde.
There's more Cape Verdeans abroad that are inside.
And we also have the impact in the consumption.
You'll see a crowd of people just buying flags, buying T-shirts, you know, in the restaurants bars, small shops.
Everyone is happy.
When everyone is happy, you are more likely to consume.
And this is a positive impact on the economy as well.
As you can hear, excitement is at fever pitch as the game ends in a nil-nil draw.
Cape Verde, the second smallest country in the World Cup against one of the favourites, Spain.
The party is only just getting started here on this group of islands in the middle of the Atlantic.
I'm with Kenny Andrade, who manages one of the bars on the seafront here in Praia.
Kenny, a great day for you.
You must be very happy.
Oh, yeah.
Yeah, very, very.
We're loving it.
Tell me roughly since the World Cup started, you have double the amount of people.
I would say triple.
I hope i get to see more tourists coming this way.
You know, they all know where we come from.
You know still little islands, but we make a lot of noise.
Rachel Wright in Cape Verde.
Now let's bring on Peter, Peter Jankowskis, with a look at the markets.
He's from Arbor Financial Services.
And SpaceX shares down again today, Peter.
Yes, they were down 16, so they've now fallen to a level below their initial day's closing price, which was approximately 155.
I think they're at $153 now.
A lot of concerns there about dilution of the shares, with a bond offering coming out to fund their AI investments, and also the plans that were announced last week to purchase another AI company.
And Alphabet shares down as well.
Yes, and this also appears to be related to AI.
Alphabet was down about 5%.
They had two of their leading AI researchers leave the company, one to go to work for Anthropic, the other one to go to work for OpenAI.
And they also are planning a debt offering of about $80 billion to pay for data centers.
So all of that weighing very heavily on their shares.
Finally, a lot of talk about the traffic through the Strait of Hormuz, or lack of it.
How has energy been performing?
Energy's done extremely well.
It was up more than 1% today with the overall market down about four-tenths.
Some of that is that, you know, freeing up crude for the market should be good for energy companies.
And in terms of the US relaxing sanctions and allowing Iran to sell their oil in dollars on the world market.
Peter, thank you very much indeed.
Now tributes have been pouring in following the death of Alan Greenspan, the influential economist who set US interest rates for four different presidents as chairman of the Federal Reserve, one of the longest periods of economic expansion in US history.
Former Bank of England Governor Lord Mervyn King told me he remembers him fondly.
He was chairman of the Federal Reserve for almost 20 years, from 1987 to 2006.
He had a baptism of fire with the stock market crash in October 87, just a couple of months after he took office.
And he had to deal with a large number of international financial crises as well.
In Mexico, the Asian financial crisis.
He was an extraordinary figure.
And I think he wasn't just a great economist and central banker.
He was an extraordinary individual.
He worked things out for himself.
He had deep convictions in the importance of sound money and the market economy.
And I think to lead any institution, it's important to have intellectual convictions about the objectives of the institution and the means of achieving them.
Because otherwise, if the leader relies on advisors to suggest what he or she should do, then when things as they will get difficult, then the leader will start to doubt the advisors and turn to someone else.
And that way guarantees incoherent and volatile policies.
We've seen quite a lot of that.
This lengthy period that he was in charge for was, in relative terms, a period of economic plain sailing.
Was that down to him?
I don't think you can say a period of plain sailing is entirely down to one individual, but he responded to the challenges thrown at him very sensibly because he would just sit down and think it through for himself.
He had the stock market crash only two months into office, which was the biggest stock market crash that the US had faced since the famous crash of 1929.
He had a lot of international challenges to face.
And domestically he kept low and stable inflation in the US and positive economic growth almost the entire way through his 20-year tenure.
So I think he was a remarkably successful chairman of the Fed.
And that was seen by all the politicians of both major parties in the US.
He was reappointed by both Democratic and Republican presidents.
Obviously, every event is slightly different, but just in layman's terms, what was his response as an economist that kept things on the straight and narrow.
Well, he would make sure that he understood what was going on in the economy.
He didn't rely just on official statistics.
He would talk to business people, anyone who might be able to furnish him with ideas and understanding of what was actually happening.
And he really in the 1990s was very successful in spotting the increase in productivity growth occurring in the United States.
And by understanding what was going on, he was able to make judgments about where interest rates would go.
That would ensure that growth would keep positively and supporting the US, but not so fast as to threaten higher inflation.
I heard someone earlier today talking about his career, saying he was in part responsible for the chaos that followed shortly after he left the Fed.
Is that fair?
I think that's somewhat unfair.
I mean, the major problems were that banks themselves borrowed far too much and their own so-called leverage was so high that they were not in a position to withstand significant losses which came about through the subprime mortgage market.
Some people have argued that he kept interest rates too low and was not really supportive of tougher regulation on the financial sector.
But of course, regulation is not decided by the central bank, it's by politicians.
And on both sides of the Atlantic, politicians were going home to have a light touch.
Regulatory framework.
And financial institutions were generating large amounts of revenue, some of which was handed back to politicians to support their work, as well as contributing to national tax revenue.
There was no intellectual room, I think, for Alan to be able to say well, we should have tougher regulation.
If he had said that, I don't think it would have made any difference.
But he didn't say that.
And I suppose you could say that was something Indeed.
I was just wondering whether you think he would have handled the sort of economic rollercoaster we've had in the last 20 years any differently than the people who've been in office.
Well, I think he set out the way in which they should do it, which was to make sure they really understood what was going on in the American economy and apply that to a judgment.
To move interest rates up or down, to ensure steady growth with low inflation.
I think his example lived on.
I don't think what happened since would have been carried out differently by Alan Greenspan.
But his reputation was one which inspired not just the staff of the Federal Reserve but, I think, central banks around the world.
Lovely to hear the respect in your voice as you talk about him.
And we understand he used to listen to the BBC World Service.
He did.
Every morning at his bath, he would listen to the BBC World Service to find out what was going on around the world.
He was actually rather upset when the BBC stopped their shortwave transmissions to the United States and North America.
And he was a great mentor to me.
I mean when I left the bank.
I went to New York and taught at New York University, which is where he obtained his degree.
And I became the Alan Greenspan Professor of Economics.
And I was immensely honored and proud to be that.
Lord King with his memories of Alan Greenspan, who's died.
Don't forget to subscribe wherever you get your podcasts.
You'll also get a daily edition of World Business Express with money and work news from around the world.
That's it from me, Andrew Peach, and the World Business Report team for today.
The programme's back same time tomorrow on the BBC World Service.
Hi, this is Nick Mars from the Global News Podcast.
We're bringing you the latest on a record-breaking heatwave in Western Europe, as the head of the United Nations warns that fossil fuels are driving a climate crisis.
Join us to hear the day's top stories from BBC News, delivered twice a day on weekdays, daily at weekends.
Search for The Global News Podcast wherever you get your BBC podcasts.
