for you on bbc news: theresa may, britain's prime minister, has apologised to her party's mps, for the conservatives' performance in the general election. the political uncertainty looks likely to delay the queen's speech, when the government's policies are formally presented, from its scheduled date on monday. the russian opposition politician alexei navalny has beenjailed for 30 days following demonstrations across the country. hundreds of people were detained during a day of anti—corru ption protests. the rallies were called by mr navalny, a strong critic of president vladimir putin. in france, president macron‘s new centrist party seems likely to win by a landslide in the upcoming, final parliamentary elections. after this weekend's first round of voting, en marche is on course to win more than two thirds of the seats in the national assembly. it's time, now, for hardtalk. welcome to hardtalk.
i am stephen sackur. the western world, for so long the dominant force in global politics and economics, is confused and uncertain. in the past week, elections in the uk and france have pointed to fractures in europe. donald trump's worldview and angela merkel‘s are poles apart. the western consensus on liberal economics and globalisation is no more. my guest is stephen king, influential economist, writer, and chief economist to hsbc bank. is globalisation stuck in reverse gear? stephen king, welcome to hardtalk.
thank you very much. given the dramatic nature of events in the uk, we have to start with britain, and then move our perspective to the world as a whole. we have just seen an election that has brought about a hung parliament and a sense that nobody knows really what the government theresa may forms will actually do about brexit and a whole host of other challenges. do you feel a deep sense of incoherence and uncertainty in britain? there is. because the vote brexit was originally 52—48 in favour of leaving the eu. 48 for remain. and for those who wanted to leave, they were really a variety of different views as to what people wanted.
some had a nostalgic view of things in the past in the 1950s and 1960s —— some had a nostalgic view of things in the past in the 1950s and 1960s when globalisation was not getting on their way. others said the eu was far too protective. we are better off outside of it to recover productivity. others focused on the issues of migration. that was clearly an issue for many people in the uk. in many ways, the vote for brexit was a vote against something, against the eu. without being clear of what it was. it is that split that has made life so difficult for politicians across the political spectrum over the last few months. when we talk about the split across the political spectrum, we must remember that the conservative party under theresa may got 43% of the vote, but 40% of the vote went to jeremy corbyn and to lead the party —— labour party, selling a hard left and radically socialist agenda, a
tax and spend agenda. more radical than we have seen in years. in terms of britain and a broad consensus over years about liberal economics and open economies and embracing globalisation, is that at an end? there was little debate about something that matters, economic growth. with economic growth, you have decent growth with tax revenues. you can do all sorts of things with public spending, you can target pensions and healthcare as well, what you want to do. in the past ten years, we have seen little economic growth. we now have a kind of battle over the spoils of economic activity. that battle becomes awful. on the one hand, some say it should be a low—tax economy. many would say that is not fair, because you are only benefiting the wealthy. you could have a high—spending economy. evidence from around the world is if you have high public spending you can squeeze out entrepreneurial
activity that you want to generate decent long—term growth. both parties refuse to discuss how you make the cake bigger. as a consequence of that, they were not able to discuss how to create revenue for all that they want to achieve. my point is borne out of your book, brave new world, talking about globalisation. it seems there is a lesson from the united states where one can argue donald trump, whatever he actually is in terms of a successful billionaire of globalisation and small l liberal economics. yes. one can say the same, arguably about theresa may, and certainly jeremy corbyn, and others like bernie sanders, in the us whom i interviewed recently on hardtalk.
there seems to be a move away in the west in many different countries away from this liberal consensus, of which globalisation is an important part. absolutely. i think what's really happened is the narrative has changed. if you go back to before the financial crisis, and actually a little bit further, 1989 and the fall of the berlin wall. there was a powerful sense at the time that the world could be a better place with western liberal and democratic values, or brazil, or whatever might have been the case. but we have seen growth rates slow down dramatically, even in china and india. but also, there has also been a much bigger sense of winners and losers, in the west. inequality. bernie sanders was telling
me the other day that as far as he is concerned, the rise of the billionaire oligarch class is one of the fundamental sicknesses that is undermining the health of his nation, the united states, today. well, it's possible, although, if you look around the world, you realise that globalisation has actually dragged a huge number of people out of poverty. bernie sanders said during the campaign that he said globalisation wasn't working for the us and elsewhere in the world. i think that is a mistake. in the us, you have winners and losers. in china, you have had an extraordinary transformation in living standards over the past few years. it has a different effect on things. in china, income equality has gone up, but it's only because you've seen a dramatic increase in urbanisation. others remain in poverty,
but many have been lifted out of it. the us and europe. it is a different story. some have been left behind for one reason and others have done well for another. it is a western difficulty, not a global one. equality in the usual way. in the case of the uk and europe, it is more complex. you don't have an increase in overall income equality. but you have dramatic increases in regional income inequality. if you are in london, you have probably done quite well over the last 30 years. in the eurozone, europe, if you're germany, you are doing quite well... in a sense, you have got a stake in this because you work for one of the biggest transnational corporate banks for many, many years, the chief economic adviser. you oversaw a system where the banks were bailed out for totally irresponsible behaviours in 2007-2008. you also oversaw a financial system that helped the very rich and did
nothing for the low and middle earners. and we have seen the figures show it. over a generation, if you live in the united states, europe, your living standards have not only risen, but in many cases, have actually gone down. first of all, i wish i was that powerful. i provided advice to hsbc, andi powerful. i provided advice to hsbc, and i provided advice to many people. i did not have the power to give those kinds of results. ok, so, you were not the architect of the system, you were a happy and comfortable cog in the wheel, if you like. you must thought about this in 2007—2008, when you saw the fallout of the crash which affected many people. it is worth remembering in the period before 2007,
there were warnings about what might happen. no one got the whole story. i was writing in 2003, 2004, about the dangers of the us housing bubble, for example. clearly, house prices were rising quickly. look at the us at the time. there was little willingness to listen to these warnings of danger at that particular time. in hindsight, there was a bubble. look at the attitude of the us government at the time, whether it was the administration, congress, they were in favour of saying we need a property—owning democracy. we need more people owning property. look at regulators. they were happy to allow the growth of so—called sub—prime lending. many things were going on. when i warned of these kinds of things, and other people as well, who were warning about the dangers associated with the story, there was a collective unwillingness to listen, whether you where a bank, whether you were a finance ministery. .. the power of the system is vested
very clearly with transnational corporations and an elite who are tied into the political system and who can game the political system. that may be changing right now. to go bring you back to the the british system, you remain a key economical voice in britain. who does theresa may listen to when she has to put together a brexit strategy? the argument is that in recent times, in part, frankly, big business has been somewhat discredited in the eyes of the public, she has not been listening to them. i think the way she has put her policies across is look at the person in the north of england, wales, whatever, she wants to reach out to more people. big business has in one sense been ignored. that is highly understandable. you know what is i saw a survey after the election from the institute of directors, which has seen 57% of business leaders professing to be either
quite or very pessimistic about the future of their businesses in the uk today. to you, does that represent something of a crisis here in the uk in terms of where our economy is going to go as this brexit uncertainty part of the uncertainty is do we have access to the single market, if we have it, what do we have access to? the problem here is that britain attract lots of business from abroad from transnational corporations. it does this because it has a flexible labour market, the english language, all of these advantages. people come to britain precisely because they want proper full access to the single market, ie, so they can sell to the whole of europe by building cars, for example, in britain. if it turns out these
companies — japanese, american, whatever companies — if they have no access, risky access, they may go to germany, poland, wherever it might be. how do you read where we sit today? you are a much more loose adviser to hsbc now. not the chief adviser. they are classic transnational business with a long history in london as well as in hong kong. yes. going forward, the directors, bosses, those of hsbc, they have to make a choice, do we continue to invest in a london headquarters, or do we put more future investment into a european hub or hong kong? theresa may, sitting there, with so much confusion, hard brexit, soft brexit, what do you think a boardroom like hsbc is going to do? first of all, i cannot speakfor them
as i do not represent them. no, but i want your insight. but in terms of any company, whether it is american, japanese, whatever it might be, they will be thinking hard about whether britain is the right place to be copied the consequence for britain is they have a balance of payments deficit over the last few years funded by investment coming from abroad. if that funding doesn't appear, the sterling gets be weaker. but that is not right. it raises import prices. it means prices in the shops go up. it means a lower wage rise. a lot of consumers, a lot of households, and are being worse off. one of the ironies of the brexit vote is many people who might have voted for brexit in england or wales, wherever, as a consequence of the falling sterling and the erosion of spending power, they are actually worse off. i think one of the economic forecasting groups reckoned that the so—called hard brexit, ie pulling out with no
deal on preferential access to the single market, it could cost, over the next ten years, 2.6% of gdp. if we go for a so—called norway option, a sort of full access to the single market, even though no voice in how it is shaped, that might be half as damaging, i.3% loss over the decade. in your view, how grave is the threat hanging over the united kingdom, today, in terms of economic damage done? first of all, i should reveal my own preferences. i voted remain, so i had economic concerns about the consequences of any kind of brexit. i would also note that if you interpret brexit as a vote against, for example, immigration, it is a difficult under those circumstances to the norwegian—type model. because freedom of labour, movement of labour, is one of the pillars of the single market. if you refuse that, then you this cannot have full access to the single market. and the desire in the uk is to have an a la carte menu,
to pick that and the other, but within the eu itself, there are rules. within the scope of those rules, it makes a difficult simultaneously do have full control over immigration and at the same time be a member of either the single market or the european economic area. is that you look at the choices that the uk want to make and the choices available from the eu, they might be contradictory. you have just come from the united states, where you've witnessed, as we all have, donald trump's impact on america. let's leave aside all the legal issues, russia, investigation issues — let's just talk about donald trump and economics. his message is one of america first, an embrace of the idea of protectionism when necessary for americanjobs. the building of walls, where necessary, to stop people coming into his country. it is the very antithesis of this small l liberal, open economics that we have talked about as the consensus for the last generation. add to that, you know, the message coming from britain, and would you say
that we are at the end of an era in terms of the west's economic thinking? i think we probably are. so you go back a long way to 1944, the so—called brettoneux conference in the us. —— bretton woods conference. it set the institutions for the post—war world. these institutions recognise something important, which was that countries connected with each other and engage with each other. we are far better off having that engagement then having disengagement. people had learnt after the terrible experiences of the interwar period that having countries that did not relate to each other, did not engage with each other, was very damaging. trying to avoid the damages of the treaty of versailles,
bretton woods comes along, you have the creation of the international monetary fund, you have money coming through to europe, in the form of the marshall plan, a generous act by the us, you had the seeds being signed for what eventually became the european union. the importance of each of these that was by creating the rules of the game internationally, trade connections, connections and other people and their movement, and so on, it meant, in one sense, that wealth and income could rise pretty swiftly. but what has happened over the last ten or 15 years, partly because of the slow down growth and the increase in income equality, there is a sense that these institutions, in fact, all the global economy, has failed. it has raised questions about the security of the nationstate. in one sense, it has returned to what we saw in the interwar poor at period, or 19th century. a retreat in the west, but not a retreat in the east. i mean, china is not talking about retreat. china is absolutely...
i think beijing is entirely happy about this, because it gives china an opportunity to create its own form of globalisation, which arguably competes... it's a very different brand of globalisation that we now need to look towards and to understand as perhaps the pre—eminent force of the 21st century. so i have this sort of sense, and this is a long historical sweep, of where we move from what is loosely described as a post—columbus world to a pre—columbus world. this is what i mean by the long historical sweep. christopher, that is? christopher columbus, yes, in case you're wondering who that migh tbe. the point about this is that we have lived all allies with a sense of it is europe, it is the us, it is basically the west that governs the world. and you can take this back to columbus and the shift of economic and political power. the seed of european empire building. absolutely. and that reaches its apotheosis with the us having the dominant power after the second world war
and of course with the fall of the berlin wall and so on, the thought was that western values, western everything had won. because the west has lost its way, and other countries have been successful, especially china, we start to see new competition coming through. with donald trump — and to be fair, hillary clinton would have probably done the same thing — is to withdraw from the transpacific partnership, a set of rules to link north america, south america, and asia, to create a trading bloc, whereby a ready could agree on the rules of the game and engage with each other. important, of course, the tpp excluded china. having gone, it creates a vacuum china can fill. this book is subtitled the end of globalisation: the return of history. that there are some forces in the country continue to push us towards a more open, globalised world, whatever the politics of the day in the united states, or indeed, united kingdom. those forces might include the the unfolding, or the the continued unfolding of the digital age,
the internet, and everything that goes with it. and you could include artificial intelligence, robotics, 3—d printing, all of these things. surely they are going to leave us all more interconnected than ever before, whether we like it or not. that — that's a natural conclusion. although in the book i cast doubt on some of this. the reason i do that is not on having technological advance, but what you do with that technology, when it comes along. so if you look at previous eras of globalisation... but technology tries to globalisation, doesn't it? not necessarily, no. first of all, it decreases the cost of communication around the world. that they can create all sorts of pressures in different way. for example, social media, i think, has created circumstances where you can get a sort of herding of ideas, which is of pursuit of belief, rather than a pursuit of truth. under those circumstances, it makes it easier for people, perhaps populist politicians, to be successful in ways that they wouldn't
have been years ago. donald trump was brilliant at exploiting social media. people might laugh at his twitter accounts, but it isn't an issue. one of the biggest issues in late 20 century was the growth of what has been described as global supply chains. the fact that you make something and... you have your iphone and it is made in china and sold for a vast amount in the us. although sorts of things. although it is more complicated than somebody made in china. nevertheless, you have this global supply chain. it means capital can go in search of relatively low—cost labour in different parts of the world. but imagine a world whereby robotics means that robots are even cheaper than the low—cost labour. then why not bring the production back home? that process of reshoring will be an interesting and potentially dangerous story of the next decade. because the more that you reshore, the more difficult it is to spread wealth to other parts of the world, so it will be harder to catch up.
when i betrayed you as a big fish, in a big bank, with a global reach, you told me not to get too carried away. it seems to me that you spent your entire career at the heart of a financial and economic system which looked forward with great optimism to the future, because it felt that you, and your hsbc bank, you are part of it, you felt that the world was yours, going in your direction. do you not feel that any more? do you feel — i know you've left hsbc, but you still represent an important and influence force in the west. you still fear for the future? yes. i feel uncomfortable in some ways. i think when the west starts retreat into the idea of nationstates, it starts to define itself as us against them, whoever they might be. and globalisation in one sense was a desire or mechanism to reduce the them in the world.
it was us altogether. some might dispute that. but it is dramatic reductions in terms of global poverty of the last 30 or a0 years, you could reasonably say that this a very powerful and in economic terms a very successful story. but when you return to the nationstates and start this debate about us and them, you end up with a much more antagonistic relationship between different countries around the world. and the most obvious antagonistic relationship that might exist in the years ahead, of course, is the existing superpower and the aspiring superpower, namely the relationship between the us and china. and then going back to the pre—post—columbus world, if you are someone from 1100 or 1200 ad, and looked forward to today, and a map of the world as it is, and see these chinese—led organisations, that is going to look very familiar. because this is something they would recognise from the pre—columbus days. back to the future? back to the future. stephen king, we have
to end it there. thank you very much. thank you very much indeed. yesterday was a bit of a breezy day for most parts of the uk, with a fair bit of cloud and a little bit of sunshine. in the north—west of the uk, we got temperatures up to 12 degrees. but we got to 20 celsius in the south—eastern corner. we're going to go a little bit warmer than that in the next few days, particularly so for england and wales. a lot of dry weather and the forecast and the winds are quite, light as well. some decent conditions getting out and about. 12 or 13 degrees today and yes, some rain to be had, mainly in the north and west. a wet start in western scotland. the eastern side will be
that the drier, perhaps brighter as well. a fair bit of cloud in northern ireland through the morning. some outbreaks of rain as you will find in northern england. about here, not so large, but rain nonetheless. then the cloud breaks up there. sunshine possible during the morning across much of our southern counties. light winds as well, so a reasonable start to a pretty pleasant day. we will see some good spells of sunshine across the southernmost counties. patchy cloud developing. but with light winds, sunshine, it will become pleasant out there. temperatures will get into the low 20s. to the west of rain time in scotland, that it becomes lighter and more patchy with time. showers in northern ireland. one or two in northern england, but few and far between by this stage. 19 degrees for aberdeen and belfast, 23 in the south—eastern corner. and then as we go onto tuesday night, heading into wednesday, this low pressure system is trying to push in from the west. it is running into this high, and that results in the south—westerly wind being pushed north. that will bring warm air our way. wednesday will be the peak
of our temperatures this week across england and wales in particular. we start on a fairly warm note, and there will be a good deal of sunshine, light winds, too, with temperatures rising quickly through the morning. through the north, more of a breeze. more cloud and some rain at times. but not so across england and wales. lots of sunshine, light winds, and those temperatures get up to 25, 27 degrees in the south—eastern corner. quite humid as well. the low 20s quite widely elsewhere. maybe the upper teens if you head further north. going into wednesday night, to the west and a weather front is coming. potential thunderstorms. this weather front is going to be bringing some fresher air in from the atlantic. the rain on this weather front fizzles out as it works its way from west to east. still quite warm, though, actually, in the london area, on thursday — 23 or 24. further north and west, some showers around, and temperatures coming down by a notch or two. this is bbc news. i'mjames
menendez. our the top stories this hour: after the apology, theresa may is under pressure to get deal with the dup and make a queen's speech delivering her priorities on time. more questions for the trump administration: the us attorney general prepares to testify on his role in the russia investigation. israeli conductor daniel barenboim visits the west bank in nearly a decade. we have an interview with the musical peacemaker. —— uber under the microscope — the ride hailing app will reveal the conclusions of a self imposed investigation in to its work practices.