into the fire that engulfed a london tower block, killing at least 17 people. that figure is expected to rise. fire chiefs don't expect to find more survivors, but it will take weeks to complete the search for bodies. local people have angrily demanded to know more about how the fire spread so fast. london's mayor has said they should not have to wait for answers. doctors treating otto warmbier, the american student released on tuesday from a north korean prison, say he has suffered extensive loss of brain tissue and is still in a coma. the jury in bill cosby‘s sex assault trial has told the judge they are deadlocked on day four of their deliberations. thejudge has instructed them to keep on trying for a verdict and they have been sent home for the night. bill cosby denies drugging and assaulting a woman at his home near philadelphia in 200a. now on bbc news, hardtalk. welcome to hardtalk.
i'm 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 world view 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. —— writer, and former chief economist to hsbc bank. is globalisation stuck in reverse gear? stephen king, welcome to hardtalk.
thank you very much. i think given the dramatic nature of recent political events in the uk, we have to start with britain, and then move our perspective to the world as a whole. but uk — 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 on brexit originally was 52—48 in favour of leaving the eu, 48 for remain. and for those who wanted to leave, there were really a variety of different views as to what people wanted. one group may say they had a nostalgic view of things
in the past in the 1950s and 1960s when globalisation and europe was not getting in their way. others said the eu was far too protective, that we are better off outside of it to recover productivity. others focused on the issues of migration. another might focus 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 which has made life so difficult for politicians across the political spectrum over the last few months. and when we talk about the split across the political spectrum, we must remember that the conservative party under theresa may got roughly 43% of the vote, but 40% of the vote went tojeremy corbyn and the labour party, which were selling a hard left more 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 or healthcare or education or whatever 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. —— that battle becomes awkward. 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. or you could have a high—spending economy. but the 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. in one sense, 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 to spend on all that they want to achieve. my point, and it's 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 businessman, he is no fan of globalisation and small—l liberal economics. yes. and 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 go back a little bit further, 1989 and the fall of the berlin wall, and there was a powerful sense at the time that the world could be a better place with western liberal and democratic values and the world could be better and the west could trade with china or brazil, or whatever might have been the case. it was really a very positive story. 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. inequality, yes. 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. in fact 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. but in china, you have had an extraordinary transformation in people's living standards over the past few years. so you have different attitudes towards income and quality. 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 parts of europe, it is a different story. some people have been left behind for one reason and others have done well for another. it is a western difficulty, not a global one. moreover, in the us, you want high levels of income
equality in the usual way. looking at billionaires compare to the ordinary worker. 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 wales, you have been left behind. 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 —— in a sense, you have got a stake in this because you worked for one of the biggest transnational corporate banks for many, many years — you were the chief economic adviser. you oversaw a system where the banks were bailed out for totally irresponsible behaviours as we saw in 2007—2008. you also oversaw a system wqere, ftrankly, you were locked into a 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, or much of europe, and you are a working person, your living standards have not only risen, but in many cases, have actually gone down. well, first of all, i wish i was that powerful. i provided advice to hsbc, and i provided advice to many people. i don't think i 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. and you must thought about this in 2007—2008, when you saw the fallout of the crash which hurt many ordinary people. it is worth remembering in the period before 2007, there were warnings about what might happen. no—one got the whole story. —— no—one got the whole story right. 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. if you 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‘ attitudes. they were happy to allow the growth of so—called sub—prime lending. there were many things were going on. but what i found surprising at the time is 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 were a bank, whether you were a finance minister... because the power of the system is rested very clearly with transnational corporations and an elite who are tied into the political system and who can game the political system.
now, that may be changing right now. to bring you back to the british system, you remain a key economical voice in britain. to debate today it is 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. true. do you think it is? yes, 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 stunning? i saw a survey post—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 continues? part of the problem is uncertainty and do we have access to the single market? if we have it, what do we have access to? the problem here is that britain attracts lots of business from abroad from transnational corporations. it does this because it has a flexible labour market, it has a good rule of law, the english language, all of these advantages. people come to britain precisely because they want proper full access to the single market — i.e., so they can sell to the whole of europe by building for example cars, for example, in britain. the difficult for britain now is 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, you still work with them but you're not the chief adviser. they are classic transnational business with a long history in london as well as in hong kong. yes. but going forward, the directors, bosses, those of hsbc, they have to make a choice — do we continue to invest in a london hq or do we put more future investment into a european hub or hong kong? what do you think? with 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 speak for 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 located.
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, 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, 1.3% loss over a 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 have 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 19114, the so—called brettoneux conference in the us. —— bretton woods conference. it set the global institutions for the post—war world. these institutions recognised something important, which was that countries connected with each other and engage with each other. and we are far better off having that engagement within global rules than 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, the world bank, you have money coming through to europe in the form of the marshall plan, which was 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 freedom of 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. there's a retreat into the supposed 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... no, i think beijing is entirely happy about this, because it gives china, in one sense, an opportunity to create its own form of globalisation, which arguably competes... that's what i'm getting to. 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 shifting from what we describe loosely 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 might be. 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 becoming 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. partly because the west has lost its way, and other countries have been successful, especially china, and we start to see new competition coming through. with donald trump — and to be fair, hillary clinton probably 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 potrayed you as a big fish,
in a big bank, with a global reach, you told me not to get too carried away. you said you weren't very important. but 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 influential force in the west. do you still fear for the future? yeah, 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 them 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 dramatic reductions in terms of global poverty over the last 30 or a0 years, you could reasonably say this is 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, yeah. stephen king, we have
to end it there. thank you very much. thank you very much indeed. hello there. it looks predominantly dry for the uk for the next three or four days. temperatures will rise as well. but actually through the course of yesterday, we lost temporarily some of the heat. things freshened up behind our cold weather front. we still managed 25 degrees in the sunshine ahead of it. but the fresher atlantic air brought quite a pestering of showers, which continued into the evening but have been easing away overnight, as high pressure‘s built in. but we're not without weather fronts. there will be very weak weather fronts coming in across parts of northern ireland
and western scotland. so it will be a more comfortable end to the night but we will have rather more cloud again to greet us across northern ireland, western scotland. cloud coming and going further south, i think, is really the name of the game, because it will be bright with some spells of sunshine, particularly in southern and western areas. for the west of scotland, and the islands, the western isles in particular, it looks to be fairly damp day, 14s or 15s here. east of the grampians where the sun comes out, we could see 19 degrees, 20 across northern ireland with some afternoon sunshine as well. we'll see varying amounts of cloud across northern, central and eastern parts of england. looks like we could see some very decent breaks in the cloud across south wales and the south—west. temperatures in comparison to recent days will be just a degree or two down, 22, 23 the high, but strong sunshine and very high levels of uv unfortunately. as we go through the coming night, we'll see a little bit more misty low cloud around. we'll see that anyway through the day across western scotland. there could be some around southern and western areas, notjust the coast but inland.
it's not going to be a particularly cold night either. as we move into saturday, we've got that high—pressure starting to build in again, pushing those weather fronts northwards. they're still going to hang on in the far north—west of scotland through saturday morning but it's essentially a fine day. more sunshine, i think, compared with the day ahead. although for northern ireland, still some cloud around and scotland, again, the best will be the east for scotland and there we could see temperatures getting into the low 20s. a little warmer for northern ireland again, and certainly so across england and wales as we start to build up the warmth. sunday again we see the warmth building even further. we start to pick up more of a southerly in the south, so hopefully losing the misty low cloud but, again, the north—west of scotland is looking as if it could be persistently cloudy, with some rain at times. if you are finding the prospect of temperatures approaching 30 a little stifling, the sea is a little cooler at this time of year so those sea breezes will be refreshing. but the sun will be just as strong, even around the coast, it doesn't matter if it's 15 degrees or 25 degrees. and these are the uv levels
through the weekend, as you can see, they are high for many parts of the country. the heat builds further as we head into the start of the new week, particularly in the south. this is bbc news. i'm james menendez. our top stories: police start a criminal investigation into london's deadly tower block fire but they say some victims may never be identified. us politicians unite on the baseball field a day after the shooting that left republican congressman steve scalise critically wounded. is western surveillance technology aiding human rights abuses across the middle east?
we have an exclusive report. and i'm rachel horne. coming up in business: back from the brink, again. after months of wrangling, lenders agree on more bailout money for greece and the chance of debt relief next year. could the greek tragedy be reaching its final act? plus, havana rethink — are cuba's growing business ties with the us now under threat from president trump?