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tv   Dateline London  BBC News  February 28, 2021 2:30am-3:01am GMT

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bullets to disperse crowds, in the biggest crackdown yet on people protesting against the military coup. over 400 people were arrested in yangon. the army, which seized power earlier this month, says it's sacked the country's un ambassador after he condemned the coup. new zealand's biggest city has begun a snap seven—day lockdown — after the discovery of a new coronavirus case. the police in auckland have prepared checkpoints near the city's borders — and public venues have been shut. residents, including schoolchildren, have been told to stay at home. more than 20 people have been arrested and three police officers injured during violent demonstrations against covid—19 restrictions in dublin. officers were attacked with fireworks, cans and bollards. the irish minister forjustice described the protests as mindless thuggery. now on bbc news,
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dateline london. hello, and welcome to dateline london, the programme bringing together foreign correspondents based in london with bbc expertise. i'm geeta guru—murthy. after the crisis, the deluge. keeping economies afloat has cost exchequers around the world a fortune and now, as we peer towards the end of lockdown, thoughts are turning to how we pay the bills. will there be a deluge of new taxes? the austerity of 2008 seems out of favour now so will there be a continued flood of spending? will economic activity bounce back rapidly or will tax revenues take a hit as unemployment rises? it is often said that if there are three economists
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there will be four opinions, and i am joined today by marc roche from france's le point and stephanie bakerfrom bloomberg. and here in the studio, at a safe social distance, the bbc�*s business editor, simon jack. thanks forjoining us and welcome to you all. in britain, the chancellor, rishi sunak, presents his budget next week. there's pressure from new conservative mps in the north, along with the labour party, for continued support through the pandemic and no tax rises. the hope is that economic growth and perhaps controlled inflation will do the trick. but what if it doesn't? could future low productivity, low investment or a rise in interest rates all pose dangerous risks, especially to jobs? simon, a big week ahead for the government — setting post—pandemic strategy and the first budget after brexit — what are you expecting? i think there are two main challenges. we are coming out of the worst
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slump in over 300 years, and we've moved from a protect and survive mode to a support mode and then a growth mode is what we need next. if there's one thing that is the most powerful weapon to bring down debt as a percentage of your economy it is growth. if you've got this debt to gdp relationship, one of the best ways to get that down is increase the denominator, gdp, keep that going. if you have that, then you can also keep unemployment down, which will then keep the numerator of that fraction under control. so there will be a big emphasis on growth, and i expectjobs, jobs, jobs to be the mantra running through the chancellor's mind. you have a furlough scheme, the wild card is what happens when there is measures are removed. it seems to me almost
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guaranteed that he will extend the furlough scheme that supports wages. he'll also extend the business rates and business tax holiday. but he will say that he has to be honest about the challenge of the public finances. it is almost 100% of total national income. we haven't seen this since the early 60s. he is going to say, unless we get this under control, our ability to borrow very cheaply from international investors, that window looks like it might close. we are beginning to see the beginnings of that as bond yields are beginning to raise. and the uk government and the uk is very vulnerable to those rises. a single 1% rise in those interest rates costs £25 billion. it is half the entire defence budget. that makes it vulnerable. he will have to say, yes, i will support business, but i'm going to need your help to pay it back.
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if i can bring stephanie in. it's very difficult for the government to pull the plug on funding and support. we are still in lockdown here in the uk. and yet this risk of such high borrowing is apparent. absolutely. i think the chancellor has a difficult balancing act to try to send off this message that he is being fiscally responsible yet still pumping money into the economy to support, given the fact that so many businesses are shutdown. how much is he going to go ahead and outline tax rises that many people in his own party and the labour party are opposed to? he has signalled that he will raise corporation tax, perhaps not immediately but gradually over this parliament, as a way of plugging the holes in the budget. i think he does have room to do so. the uk has the lowest corporation tax in the g7,
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and the us has also signalled that biden could raise corporation tax. so i think the concern from the chancellor is that there is significant fiscal scarring to the economy that will leave not just the debt overhang from the covid crisis but a permanent gap in public finances that does leave the uk exposed to interest rate rises. i think the estimate is something like 40 billion. so he has to strike this balance between trying to stimulate the economy and get it back on its feet while making sure that there is enough income coming in. it is incredibly difficult to figure out how quickly the economy will recover. the other question i have is, what kind of actual stimulus might he outline next week? eat out to help 0ut,
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or something like that? people have saved an awful lot of money, some people have saved an awful lot of money, during the crisis. some people lost theirjobs and are in a much worse position. but there is a lot of pent up demand. does he need to do that active stimulus, especially since many people think now that eat out to help 0ut might have contributed to the second wave of infections that we saw in the autumn. let me bring in marc roche. this is the first post—brexit budget. you would have been asking a lot of questions about the future of britain in very different economic circumstances. the government is tackling both of those challenges. the challenge of brexit is not what we expect, | because the effect will be - mid—term on foreign investment and will they use the uk -
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as a springboard europe again? or will they cater for. the domestic market? so brexit is, except the little problems, has been quite . a success short—term for the government, i and the government doesn't have to be too preoccupied _ with that. the biggest risk, as my two| colleagues have mentioned, it is about how to relaunch the economy _ britain is a good situation, better than europe, - because the success - of vaccination has given a sort of optimistic factor. one can expect the economy to be back on some sort of keel. i like in the us in the summer. the problem is the conception.
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the economy in the uk is really based on two things. _ conception and real estate. conception has to be delivered. people might be very reluctant to spend i when lockdown finishes. so he might think some sort of big war bonds to take - all of these savings and put them into productive - investment, is one of the solutions to get l the conception back. let me quickly ask for brief answers. simon, the politics in this, the perception is that borisjohnson is more of a one nation type of figure. central within the conservative party, would be very reluctant to do anything that would damage his popularity given the election cycle is 202a. rishi sunak is more
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traditional, how much does that play into decisions and judgments? numberio and number", where the chancellor lives, are structurally designed to clash with each other. the pm wants to be generous, the chancellor has to say, oh, i don't want to, i don't think we can afford that. rishi sunak is fiscally conservative, and historically the conservative party has always said this is the defining line between us and the labour party, which is that we are a little bit parsimonious, we try to look after the household budget. i think that is different. if you remember after the financial crisis there was a programme launched called austerity. but the government is very clear we are not going back to that. which means the only other way we can do that is through tax rises at some point. the other point is that we are dealing with a very different
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conservative party which has a very different idea compared to historically about the role of the state. they think it is a good idea for the state to get involved in certain areas, and therefore in this post—brexit world don't be surprised to see them doing things which you would think, that looks a bit like picking winners, that looks a bit like state interventions. net—zero, etc? you could see a lot of money going into areas of business is that you probably previously wouldn't have seen. it is interesting because the conservatives have gone into traditional labour territory. the opposition saying they don't want any tax rises. and politics slightly upended. in a way, both parties want the same outcome. yes, on the whole. for those reasons, i both want to spend.
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so there is no - difference, really. but on the whole it is quite - extraordinary when you compare to europe how stable the political situation in britain is. have a prime minister, - very stable, can concentrate. he got the vaccination at least right. - then you go into europe and what you see there, macron has to be re—elected next year, merkel, - in holland, in belgium. and then you have the problem with the populists _ in eastern europe. it is a complete mess politically, whereas l britain is very stable. we will come back to you for more on europe. to america now, where the approach of president biden is crystal clear. rather like barack 0bama in 2008 but on a vastly greater scale, the president is pumping
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money into the economy. a stimulus that is said to be worth $1.9 trillion will no doubt fund every proposed bridge and road programme in the nation, but do public works of this kind produce lasting benefits? the world is watching. has america found the route out of the economic crisis or is this too much, as even a usually sympathetic commentator like larry summers fears? stephanie, is this an over—correction? or do you think this is what's needed? biden's mantra is that you cannot spend too much, and so you saw yesterday the house of representatives passed his stimulus bill, 1.9 trillion, which outlines these cheques which will go out to tens of millions of americans worth $1400. an extension of the top up in unemployment benefits, 350 billion in state aid to local and state governments. 200 billion to the schools.
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and lots more money for the vaccination programme. so i think biden is coming at this learning the lessons from the aftermath of the financial crisis, when of course 0bama passed the stimulus package which was about half this size. in retrospect, many economists believe it was too little and that growth was sluggish, and that if they had come out bigger the recovery would have recovered more quickly. i think that is very much on the top of his mind. of course, the concern, like it was during the financial crisis, is that all of this money, this gush of money, could fan inflation. there was a lot of concern back in 2009 about that, it never panned out. we never had an inflationary situation emerge. this time, there is again still concern. there is an argument to be made
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that this time is different because this crisis has all been about the shutdown of the economy, businesses closing down, people stuck at home. a lot of people are saving money, so in addition to the fiscal and monetary stimulus you're going to have that pent up savings possibly feeding into higher inflation, which is what larry summers is perhaps concerned about, that this is going to overheat the economy. just quoting one line from his piece in the washington post. "..steps into the unknown and for credibility "they need clear statements of consequences being "monitored closely." everyone is going to follow the recovery, if that is what we are going to see, in the us. 0bviously their currency helps. what is your view? this is a huge change from trump. it's a new deal policy-
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which the democratic president and some republicans have followed _ it is very welcome. the amplitude of it is quite - staggering because, of course, there is always the danger of an increase in inflation, j especially if the growth, and it looks like the usi will start growing again in - the summer, from the summer on. if the growth continues, - raw material price will go up. there is a risk that inflation, the interest rate will go - up, which is terrible for borrowing. - but the us has never really bothered about borrowing. | and they won't do it
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today either. - we are seeing arguments over the minimum wage. the biden administration trying to double it to $15. that hasn't gone through in the last couple of days, but obviously the administrations are committed to it. give us a sense of scale of what is happening in the us. the stimulus package looks something like 9% of gdp. that is a massive number. if you compare that to the uk, the bit of the support package we have talked about which you could call stimulus is probably about 2%. in europe, they are talking about 4%. you could say the uk stimulus package is pretty weak compared to its competitors. very difficult to compare because the uk has been a bit more generous on the support scheme. which bucket do you put this money into? the question will be, as stephanie was saying, the lesson from the financial crisis was that those who did more earlier did better.
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if biden's saying, "i can't spend too much", people would say that the lesson in the uk was that we didn't fix our banks quickly enough and the us did. most economists would say the risks are on doing too little, not doing too much. fascinating. let us go to europe, where growth has been sluggish and unemployment, especially amongst the young, has been high for a decade now. will the pandemic exacerbate the problems in the european economies? will it open up structural cracks in the eurozone? with very different budgetary positions in the respective nations, will the response in europe be further integration, of taxation, for example, or will the crisis lead to further division and fuel political populism — marc, is the eu vaccine roll—out holding back recovery? it's a disaster, isn't it? you have the vaccine nationalism. - this can push back the return to normal economy. -
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on top of it, it has really. frozen all of the reform that had to be done to get europe on its feet again, _ which is labour market, capitalj market, youth unemployment. it has also exacerbated - the fight between what i would call the more democratic countries and the - authoritarian in the east. but more importantly- for the future, there is a huge crack now between the most fiscally conservative north, i scandinavia, and the southernj which need much more money at a time when the budget relaunch, which is quite i big on the continent, has been plagued by| bureaucracy, has been plagued by political problems. - so the whole situation -
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in europe is not very good. on top of it, there are. political issues coming. especially that france i and germany are going through uncertainty. macron could be defeated in next year's election, i and the succession of merkel isn't completely done. - so europe is going through very difficult times. - also, europe hasn't taken advantage of brexit. - so not good at a time - for europe and the eurozone. it's fascinating to see the contrast between east and west. how do you read events in the eu at the moment? the eurozone has suffered a more traumatic economic fallout than the us, yet the eu has responded much
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more weakly in terms of trying to get the eurozone economy back on its feet again. i think even before the crisis there was some pushback against the block's fiscal rules which required economies to keep their budget deficits to 3% of gdp. i think that's going to have to be relaxed now. that was already in the works pre—crisis. i think that the eurozone really needs to respond with more dramatic measures to try and get the economy back on its feet, especially because the vaccine roll—out has been so slow so they will be behind both the us and the uk, because their economies won't be able to reopen as quickly. the politics of this through the brexit lens.
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not such a massive focus as it might have been given the pandemic, but how does it look? has it benefited the government here? there are clear problems that brexit has created for some traders getting stuff into the eu. there are some significant non—tariff barriers. the vaccine roll—out has dominated this debate. the uk has been very effective at doing that, and the size and complexity of the eu has meant a coordinated fiscal stimulus response to the pandemic has also been hard to organise. i think the uk government has been feeling in a pretty good place about this, because to them, they will be basking in the glow of this vaccine roll—out success for a long time to come, and it will have economic benefits. i think the government will be pretty happy that they are in the right kind of place. just one point, which is about younger people. you asked the question
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about generational divide. if you look at the hardest—hit sectors across europe in every country, hospitality, retail, tourism. retail is many people's first experience of the world of work. so the younger people have suffered much more in this than others. i think one of the big challenges of governments, notjust in the uk, will be what can we do for young people? because the wild card is how many of those jobs that are on furlough no longer really exist? if they don't exist, what are these people going to do? particularly younger people. actually, london has been very heavily hit. they have incredible ecosystems built up around office worker footfall. the people who fix your shoes or do dry—cleaning or coffee, a lot of those are very young workers. they rely on a heavy
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concentration of people coming to city centres. women also hit according to some of the data around the world. stephanie, just on europe, lots of us are wondering whether we can go on holiday to europe, partly linked to the vaccine roll—out and the economic success that goes with it. i know you've been doing some work on that. yes, as we are all eager to go on holiday to somewhere warm and sunny, i think that is a real question mark over europe because of the slow vaccine roll—out. in some places, france in particular, has been very slow and behind schedule. i did speak with a greek tourism minister this week and he has some pretty bold, ambitious plans to reopen tourism in greece. he is talking, as we know, to the government about striking an agreement allowing travellers to come who
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have been vaccinated. i think what we are going to see is a mix of some sort of proof of vaccination and testing regimes to try to get tourism going again this summer. i don't know about you, it is a question on my mind. do i really want to go on holiday in europe this summer? the vaccination programme is slow and there might be more covid circulating, and i'm probably not alone in that regard. marc, what is your sense? come to europe. it's france, can you imagine? i'm vaccinated, . i will go to france. i'm coming with you, if that's all right? simon, what about you? i spent the last two days with my 18—year—old, she is about to finish her a—levels, looking at places in greece.
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what we were looking for is, can we refund this if we can't go? that was the big issue. we are all doing our bit to boost the european economy this summer if we can possibly get to the mediterranean. my thanks to marc roche, stephanie baker and simonjack. that's it for dateline london for this week — we're back next week at the same time. goodbye. the weather's been pretty good lately across most of the uk. lots of sunshine, it feels like spring. the flowers are coming up. there's certainly more oomph to that sunshine, and there's every reason to believe the weather
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is going to stay settled for the next few days because of high pressure. but high pressure doesn't necessarily mean sunshine everywhere. in fact, it really does all depend on how the wind blows and where around the area of high pressure. and sometimes we get sort of lumps of cloud stuck in that high, and they may creep in from the coast well inland. so, it does mean that some areas in the morning could be pretty overcast. where the skies are clear overnight, there'll be a touch of frost in the morning, but elsewhere, it's going to be above freezing. so, this is what it might look like in some areas early on sunday morning, and in fact possibly even into the afternoon. here's an example. around lincolnshire, east anglia and down into the south east, possibly london, too, you may have to wait a while before that cloud burns to the coast, if it does. in some areas, it might actually hang around, and temperatures will struggle to seven degrees. but out towards central and western areas, we're
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talking about 10—12 degrees. not spectacular, but actually mild enough, really, for the very end of february. because as we head into the 1st of march, the first day of meteorological spring, again a touch of frost in the morning to greet us, to greet march. temperatures out towards western areas a little bit milder there, 3—6 degrees. now, here's the high pressure monday and into tuesday. it'll sort of be around about here. in fact, extending its reach well into europe across the alps and further south into the mediterranean as well. now, look how much cloud there is on monday. now, this is so, so difficult to predict. in fact, it could linger, it may not. it may actually clear away, so there's a bit of a caveat there. yes, plenty of sunshine with the high pressure, but it's not guaranteed. and it's a little bit cooler, only around eight degrees. in fact, there will be a tendency for temperatures to drop a little bit as we go through the course of the week.
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slightly cooler air may be reaching us from the northern climes, but enjoy the sunshine if you can.
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welcome to bbc news. our top stories. myanmar security forces use tear—gas and rubber bullets to disperse crowds — in the biggest crackdown yet on people protesting against the military coup. us regulators approve the use of the johnson and johnson covid vaccine — for everyone aged 18 and over. new zealand's biggest city, begins a snap seven—day lockdown — after the discovery of a new coronavirus case. injuries and arrests in the centre of dublin — during violent demonstrations against ireland's covid—19 restrictions. tributes are paid to the record—breaking, british charity fundraiser, captain sir tom moore —
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at his funeral, family members say his spirit will live on.


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