with some protestors demanding the resignation of the prime minister. the number of people known to have died in the fire has risen to at least 30 but it's expected the final total will be higher. theresa may, says she's been deeply affected by the tragedy of the fire in west london. she's setting up a £5 million emergency fund for victims of the blaze. she made herfirst visit to meet survivors, after being criticised for failing to see local people on thursday. the japanese coastguard says seven us navy crew are missing after a us navy destroyer collided with a container ship under philippine flag off the east coast of japan. the uss fitzgerald has suffered extensive damage but is heading for the nearby port of yokosuka under its own power. 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 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% voted 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 19505 and 19605 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. 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 in favour of. 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 to jeremy 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? i think what was striking about this election was that 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 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 but 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 was 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 thought 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. 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 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 have got high levels of income equality in the usual way. looking at billionaires compared 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 inequality. 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 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 were, frankly, 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 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. the debate today 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 france or 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 risk is the sterling gets 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 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 19114, the so—called brettoneux conference in the us. 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 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, 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. but it was an important 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 portrayed 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. hello there. we have got some very warm weather indeed coming up over the next few days, with the high—pressure firmly in charge of our weather. that's going to bring very warm, if not hot, weather to most of the british isles.
it will turn increasingly humid as we go on through the weekend, but it is going to be mainly sunny for most of us. the reason for this warm or hot weather is a jetstream has built this area of high pressure and the high tends to concentrate hot air near the earth's surface. these are the kinds of temperatures that you might see across western europe as we go on through the next couple of days. perhaps as high as 46 degrees across parts of iberia, unpleasantly hot weather here. well into the 30s for france and even here in the uk we should see temperatures peaking at 30 degrees or so as we head into the weekend. the hottest weather we have seen so far this year. it's going to be a warm start to the day. these are the kinds of temperatures you might see as you are heading outside first thing in the morning. there will be plenty of sunshine, but i think quite a bit of cloud to start he day across the hills of wales and northern england. it should be quite thin so should clear quite quickly and then the sunshine will come out. weather fronts across far north—west of scotland will continue to bring some thicker cloud here.
and it's here where we will have the coolest weather with outbreaks of rain on and off. just 15 degrees in stornoway. a brisk south—westerly wind. not the warmest of weather. away from that north—west corner, the rest of scotland enjoying some sunshine. northern ireland looking fine, with temperatures heading into the mid—20s. but it's across england and wales that we'll see temperatures fairly widely getting up well into the 20s. 28 degrees or so in london and the south—east. pushing into the 80s in terms of fahrenheit. but, as well as those relatively clear skies, a bit of fairweather cloud bubbling up. there will be some very high levels of uv. so it's one of those days you might want to take the sun cream if you're out and about for any length of time. through saturday evening and overnight, after such a hot day, temperatures will be slow to fall. quite an uncomfortable night for sleeping once again. overnight lows no lower than 19 degrees in the centre of town. there could be a few fog patches staring to develop around the irish sea coast. here's a picture then through sunday, a repeat for many of us although perhaps a little bit more in the way of cloud moving into the north—west. the best of the sunshine, again, england and wales, eastern parts of northern ireland
and eastern parts of scotland. if anything those temperatures will get a little bit higher with temperatures peaking at 30 degrees celsius, making it the hottest day of the year so far. the heat is still with us on into monday as well. temperatures could reach 32 degrees early in the new week. it starts to get a little bit cooler across north—western areas as we get into tuesday. along with those cooler conditions, it will turn cloudier. welcome to bbc news, broadcasting to viewers in north america and around the globe. my name is duncan golestani. our top stories: a us navy destroyer is seriously damaged in a collision off the coast of japan. at least seven crew members are missing. consternation in cuba — havana says it won't be forced into making political changes despite president trump announcing tougher policies towards it. angry protests in london as residents demand justice for the victims of the grenfell tower fire, and support for the survivors left homeless. we are sent from hospital to hospital, to shelters, why is there no community help