TRIGGERnometry - The State of the World Economy with Liam Halligan

Episode Date: October 8, 2023

Liam Halligan is a British economist, journalist, author and broadcaster. He is currently economics and business editor at GB News. Since 2003, Liam has written a weekly column in The Sunday Telegraph. He also presents The Telegraph's weekly ‘Planet Normal’ podcast. SPONSORED BY: EasyDNS - domain name registrar provider and web host. Use special code: TRIGGERED for 50% off when you visit https://easydns.com/triggered/ Become a Premium Member to receive exclusive benefits https://triggernometry.supercast.com/ OR Support TRIGGERnometry Here: Bitcoin: bc1qm6vvhduc6s3rvy8u76sllmrfpynfv94qw8p8d5 Music by: Music by: Xentric | [e-mail] | https://www.xentricapc.com/ YouTube:  @xentricapc   Buy Merch Here: https://www.triggerpod.co.uk/shop/ Advertise on TRIGGERnometry: [e-mail] Join the Mailing List: https://www.triggerpod.co.uk/sign-up/ Find TRIGGERnometry on Social Media:  https://twitter.com/triggerpod https://www.facebook.com/triggerpod/ https://www.instagram.com/triggerpod/ About TRIGGERnometry:  Stand-up comedians Konstantin Kisin (@konstantinkisin) and Francis Foster (@francisjfoster) make sense of politics, economics, free speech, AI, drug policy and WW3 with the help of presidential advisors, renowned economists, award-winning journalists, controversial writers, leading scientists and notorious comedians. Learn more about your ad choices. Visit megaphone.fm/adchoices

What is going on with the British economy, the global economy, etc.? What should people know? Well, the world has not actually managed to get out of second gear since lockdown. The long kind of lingering tale of the pandemic is still with us. China is not at the moment anyway, the global growth locomotive that it has been for most of the last two or even three decades. People don't like to hear it, but UK exports to the EU, right, have never been higher.

At least we can now have a discussion and raise issues about net zero, not about the ultimate direction of travel, but the speed and the cost and the distribution of those costs. We have to have those discussions, because if we don't have those discussions, this isn't a democracy. The war in Ukraine has accelerated and accentuated a process that was already happening,

a process that's shifting power away from the west and towards the east. because we don't like to talk about it very much in the West because it's awkward and it has a sense of the end of history about it. But that doesn't mean it's not true. Hello and welcome to Trigonometry. I'm Francis Foster. I'm Constantine Kisson. And this is a show for you.

If you want honest conversations with fascinating people. Our terrific and returning guest today is an economist, writer and broadcaster, Leo Halligan. Welcome back for the third time. It's great to have you back. Good to be with you guys. And we always invite you on whenever we want an update on what's actually going on. We talk a lot about culture on the show and politics, but you are someone who's

got real substance and real economic, you know, strong background and analysis. So let's get straight into it. What is going on with the British economy, the global economy, etc.? What should people know? Well, the world has not actually managed to get out of second gear since lockdown. The long kind of lingering tale of the pandemic is still with us. The UK economy is just about growing, avoiding recession. Germany, Europe's biggest economy is in recession. The US is doing okay. But China, which has been the engine of global growth, the locomotive, if you like, for at least the last 20 years, contributing a lot more to the global economy in terms of raw numbers and GDP than the US even. China has stalled. Now, that doesn't mean China's

going into reverse. It doesn't even mean it's growing at 1 or 2%. It means instead of growing at 8, 9, 10%, as it has been from basically, you know, 1980 all the way through to a few years ago, China's now growing at four or five percent. And it's not just that China's growing quite slowly, which means there's less growth elsewhere. It's also the Chinese property sector, the Chinese shadow banking sector. It's now big enough, systemic enough, ugly enough, if you like, that it could cause another kind of layman moment.

There's a lot of people in the market. There's a lot of research notes going around. saying things along the lines of these big Chinese property conglomerates that have been massively bloated over many years, a huge amount of the country's wealth is in residential property. It's very difficult for middle-class Chinese people to save any other way. Sounds familiar, to be honest. These big property companies, could they be on the verge of collapse?

Could there be some kind of systemic, layman-style moment coming out of China? And that's a big fear that in recent, months has been stalking global markets and the broader global economy. And I don't want to jump in because there's lots more for you to cover in terms of everything that's going on. But on this particular issue, if that were to happen, you say layman-style event, would it have a global impact of that sort of significance? Of course it were. China's the second biggest economy in the world. It's the biggest economy in the world. On some definitions, on what we call a purchasing power, parity basis,

when you adjust for currencies. But it's, it's... It is a big economy, but I don't actually think it's going to happen. I think this is sort of overdone. I think a lot of people in the markets are putting scare stories out there, as they always do, when they want to get the Fed to stop raising rates or even to start cutting rates. The main reason I think that is because, unlike Lehman, in the run up to Lehman in 2008, you had people buying houses with sort of 5% deposits, no deposits, no deposits, you know, negative deposits where the mortgage company actually gives you money for furniture

and stuff when you buy a house. But in China, for years and years and years, the rules have been very strict, certainly in the big cities. You need a 30, 40, 50% deposit. So there's a lot less chance of these big companies going into negative equity of ordinary people going into negative equity.

But look, be in no doubt. This is a major moment in the evolution, the astonishing evolution of the Chinese economy. There is a scare over the property market, but I, for one, don't think we're going to see a big systemic lurch coming out of the Chinese property market. I think we're much more likely to see a big systemic lurch, by the way, on Western markets, government debt markets as we unwind QE.

And that's a big sort of theme in my thinking at the moment. Well, we'll talk about that for sure. The Western world are the emerging markets now, and the emerging markets are the West. Well, we'll talk about that. And, Francis, before you take over, I just want to finish with China, because there's a guy we've had on a called Peter Zahan.

I don't know if you're familiar with him. whose central argument is China is in a demographic collapse. This is why you're starting to see everything and it's just that's going to continue, going to get worse, etc. Do you buy that argument? Yeah, I mean, look, that's been going around the markets for years. Will China get rich before it gets old, right?

And the question is, will China get to a sort of GDP per head, a purchasing power per head, that can sustain the economy and get it out of what we call the middle income trap that emerging markets go through as they become advanced industrialized economies? I think China can do that. I think China's got tremendous firepower. I think China is, you know,

through its closeness with the other emerging markets since the war in Ukraine. We've seen a massive consolidation of the brick concept. It's very fashionable to dismiss that as a nonsense. No, don't dismiss it as a nonsense. A very, very important grouping. Just like people dismiss OPEC sometimes as a nonsense. It shows that they don't actually know anything about geopolitics. So I don't see China as the main source of global systemic danger in the world at the moment, though absolutely China is not at the moment anyway the global growth locomotive that it has been for most of the last two or even three decades. What about India? Because they're doing supremely well, aren't they?

India are doing well, obviously the world's biggest democracy. India's doing very, very nicely out of the war in Ukraine, thank you. It's importing a lot of Russian oil and then turn a lot of. it around, refining it, re-exporting it as Indian oil, making a lot of money. I think, though, there are, these are very big countries and their attentions, you know. You'll know Constantine about the close relations between Russia and India over many years. India was part of the non-aligned group in the 60s. You know, when I lived in Russia, constantly kept coming across very sophisticated Indian people who spoke great Russian. They'd been there for a generation. They'd often

been to the top Russian universities. Obviously, Russia sells India most of its arms. So there's a closeness there, but there's also a tension because India, of all the bricks, is probably the one that's closest to the West, certainly closest to America politically, given the massive Indian diaspora in America. And of course, there's tensions between China and India. You know, China and India are technically at war over parts of the Himalayas, literally troops standing off against each other. So this bricks conglomerate, it's not entirely plain sailing. It doesn't make complete coherent sense. But, you know, NATO doesn't make complete coherent sense.

The Allies in the First and Second World War didn't make complete coherent sense, but they were very, very powerful forces in the affairs of men. So I do think India is pretty soon going to overtake China officially as the most populous country in the world. And of course, despite all the bureaucracy, it is a more attractive place. to invest for the West. It's got, it's, I wouldn't call it open, but it's a lot less closed than China. And I think culturally it's a lot more attuned to the West. And I think very, very importantly, without mentioning the B word, Brexit, oh, I just did, if we, if the UK, right, manages to sign a

trade deal with India, that will be noticed, not just here in the UK, that will be noticed around the world, because India does not sign trade deals very, very often. And if it manages at the height of this kind of brick mania, when it's not on the west side in the war in Ukraine, very much riding two horses, very much realigning itself with the fast-growing economies of the East, as it must, finally getting out from under the sort of colonial yoke

of Europe and the Brits in particular. If despite all that, Modi, Green Lights, comprehensive trade deal with the UK, that would be a major moment, not just for the British economy, not just for the debate on Brexit, of course you couldn't do that within the EU. That would be a big,

moment geopolitically for the world, because it would say to the world, India is open for business. And Liam, let's talk a little bit about Brexit, because things are not good economically here, to put it mildy. And there's a lot of people in certain publications and news stations screaming and shouting and saying, this is the fault of Brexit. What did you expect? We've now left the customs union. We've done all of these things. We're now an economic free fall. This is your fault? Or is the picture somewhat more complex than that? I'd say it's a bit more complex. For one thing, we're not in economic free fall. The UK economy is growing. It's very much in the middle of the pack when it comes to the G7, both in terms of how it's grown since 2016 and how it's grown

since the end of the pandemic. Germany is in recession. Germany was in the EU last time I checked. And people don't like to hear it, but UK exports to the EU. have never been higher. Or, you know, thanks Anna Subri saying on question time, our exports to Europe, she literally said we'll go absolutely almost to zero. Completely incoherent. But she was basically saying we wouldn't export to the EU. Now, utter rubbish, we have never exported more in value terms to the EU than we currently

are. Now, part of that is because America is shipping huge amounts of liquefired natural gas across the Atlantic. America's become, since the war in Ukraine, by the way, the largest exporter of LNG in the world. It's good business. They're making a lot of money. And as Western Europe has weaned itself off Russian oil and gas in particular, America has filled that gap and a lot of that LNG comes through British LNG terminals, not least at Milford Haven. And then we re-export a lot of that to mainland Europe. But be that as it may, there are many other categories under which exports to Europe are actually doing really well. And the UK has just overtaken France to become

the eighth biggest manufacturer in the world. So, you know, the so-called journalists who say, we don't make anything, everything's crap, the UK's in economic freefall. You know, Orwell warned us about these people. There's a whole class of people in Britain, and they will always dis their country. And it's, and, you know, when Allwell was writing, you know, I wasn't even even British. I was, you know, my people were picking spuds

in the west of Ireland, right, living in the stone huts. And yet I would say that there's an awful lot of ingratitude in the UK towards the UK, particularly among families

who know that in their past a few generations back, they were the nasty colonial masters. They're the people who, you know, whose wealth is built off the back of that kind of behaviour. And so a lot of them make it

into the top of the mainstream media. It's not a meritocracy, my business. And then they get there and they think they have to diss the country in order to keep their conscience at bay. Well, a lot of ordinary, hard-working people, the alarm clock classes of Britain, the people who make things actually happen and work, the people that drive our economy forward, they actually quite like the UK,

whether they were born here, whether they came here. And I have the sort of gratitude of an immigrant, if you like. When my father arrived here from the West of Ireland in the 1950s, England was a properly racist country, and it was no blacks, no dogs, and no. Irish and we've got the photos to prove it, so let's not deny it. We're a world away from that now, and of course there's still bad stuff going on. Of course, there are nasty people out there. But I actually think the UK, for all the negative publicity we get, economically we're doing okay. And I think in terms of integration and multiculturalism, we're doing okay.

People will say, I'm being really complacent. I'm not. I just don't think it's nearly as bad as certain broadcasters always tell us that it is. Well, as you say, there are a lot of people whose whole world view is invested in that being true. And so they spread that idea. But coming back to economics, Liam, you've mentioned, we've talked about one controversial word, Brexit. There is another thing that you've mentioned about four or five times already, which is, of course, the war in Ukraine. We don't want to relitigate the whole conflict and everything.

But what I'd be interested to know is what you think are some of the key impacts of that conflict on the world economy, on the rebalancing and restructuring. of the world and for people here at home, what has been the impact and what will be the impact of the war in Ukraine? Well, once the war in Ukraine began in earnest, because of course there was a sort of low-level war, as you and I discussed a lot, Constantine, from Medan onwards, from 2014 onwards. There's lots of bombing going on in Donetsk, Luhansk and so on.

But once Russia actually invaded in February 2022, I think a lot of the world suddenly realized what's obvious to those of us who've lived and worked in the region a lot that, you know, these countries produce a lot of food. And they, you know, Ukraine isn't the breadbasket of Europe for no reason. You know, the historic importance of ports like Odessa, the grain funnel of the former Soviet Union. And so a lot of people have realized that if you blockade Russia, if Russian ships blockade Ukrainian ports, then food prices are going to spike.

And that's what happened. And you've got countries in North Africa, around the Horn of Africa, who are very, very heavily dependent on Russian and Ukrainian grain, but also here in the UK, you know, all those staple foods that come out of that part of the world. So we've certainly seen a food price spike, but we've seen a spike in inflation more generally. And you can't attribute it solely to the war in Ukraine. I know the Bank of England likes to, because even in January 22, when almost no one thought Putin was going to invade, including most of the people around him, inflation in the UK was already at a 30-year high. It was already at a 30-year high. The war in Ukraine,

knocked inflation up to a 40-year high. And we're still living with the implications of that. And it may get worse. At the moment, of course, in the UK, the latest numbers, inflation's come down to 6.7% in August from 6.8% in July. And that means that the Bank of England, after these falls, has been able to keep interest rates where they are for now, at 5.5% and a quarter percent. And the UK is in a similar pace to the Federal Reserve in America, European Central Bank in the Eurozone. You know, there may be one or two more rate rises to come, but for the most part, we think we've got our arms mostly around inflation. And possibly we have. But it may be that there's another twist this autumn. This is my

concern. Last autumn and winter was relatively mild. That meant we were able to spend less money than we thought we were going to spend subsidising households and firms energy bills. We still spent tens of billions of pounds, but it was less than we thought we were going to spend. America, of course, hasn't got that energy problem because it's been fracking. That's why retail electricity prices in America are a third of what they are in the UK. The UK is the most expensive in Europe, partly because of the way we do marginal cost pricing and use renewables. You can ask me about that in another question, if you like.

But for now at least, we've got, you know, still got quite high energy prices, but an expectation that they're going to keep coming down, right? But, but, but if this war in Ukraine continues, and it's probably going to continue, because why would Putin want to stop it until he knows what's happening in the White House, right? So that's all the way through to November 24. So I think it's going to go on until then. But if he decides to turn the screw this autumn and winter, what's emerged is an axis that no one in the West wants to talk about.

And that is the Riyadh Moscow axis. The Saudis, of course, the absolutely pivotal U.S. ally after the Second World War, you know, security in return for the Blacks. stuff, that's now breaking down because oil has spiked enormously over the last few months. No one, again, wants to talk about it. Give us some figures, Liam? We've gone from just over 70 bucks a barrel in June to 95 plus bucks a barrel now, and that's, you know, a 35% increase. That's huge. In August, we saw the sharpest spike in the UK in petrol and diesel prices on the forecourt that we've seen in 23 years in percentage.

terms. And Riyadh and Moscow are now working together. Look, OPEC controls a half of all global oil production, the exporters cartel, and four-fifths of all known oil reserves, right? If you add in Russia, not an OPEC member, but very much working with OPEC in this grouping called OPEC plus, then OPEC plus controls two-thirds of all global production and 90% of all reserves, right? And the reason oil is high now isn't because the global economy is growing fast. And so people are demanding more oil, which bids the price up. Because as we have established, the global economy is not really out of second gear post-lockdown, right? Yet still, oil is surging because the Saudis and the Russians are deliberately taking oil out of the market now and have been for months.

And we're not talking about it, but it's completely true. Ask any oil trader. The only reason oil is pushing 100 bucks, and it's probably going to hit 100 bucks, is because of OPEC. And that is a geopolitical wake-up call, and that could very easily complicate the West's ability to finally escape from this cost of living crisis, which, of course, would then have knock-on effects in terms of public support for the West's entire approach to the war in Ukraine. So when you say they're taking oil out of the market, for a layman, what does that mean? Does it mean they're just not releasing it?

They're keeping it? Yeah, it means instead of producing, you know, like 10 million barrels a day, right? The world uses about 100 million barrels of oil a day, right? Instead of producing about 10 million barrels a day, the Saudis will say, oh, we're produced nine for now. And we might go to eight. Because they can get as much money, because if the price goes up, they can make the same amount of money selling less oil, right?

And is that the motivation, Liam, or is there something more sinister going on in terms of they are trying to flex their muscles geopolitically as well? Look, go back to the Yom Kippur War. right and OPEC's response to that. Go back to the oil price shock after the Iranian revolution of 1979. OPEC is not a benign organisation, right? OPEC is there, they say, to stabilize oil prices, no. OPEC is there to maximise the revenue for its members. And that will often mean pumping less oil than the world needs in order to push the price up to make more money from selling less oil. And within that, that is obviously a hugely powerful tool. And

is the linchpin of that. But you've also got other very, very powerful economies. You know, you've got the Iraqis in there, you've got the Mexicans, you've got the Venezuelans, you've got the Iranians, you've got the Nigerians. These are powerful players, right? And it's not just about money. It's also about control and flexing geopolitical muscles. Because a lot of people within OPEC and the countries they represent, they don't look at the world the way we in the West look at the world. They have a different worldview. They have a different history. They have a different understanding of Western hegemony and its legitimacy. You know, in this country, in this part of the world, we take it for granted.

But a lot of people don't take it for granted. And I'm sure, like, you know, like myself, you've had many, many conversations, both of you with people from, you know, other big economies that aren't Western economies. And very highly educated, very clever people think completely different things to what you're going to read in your economist or your FT or your Telegraph, for that matter. And that realization is now coming to pass. You know, this BRICS grouping, it isn't just about summits and seminars. You know, they're building their own ratings agencies.

They're building their own payment clearance system. They're building their own version of SWIFT, which is the kind of financial plumbing of the world controlled by the US, which America can turn on and off to impose sanctions on other countries, and they often do. Well, a lot of these big economies are pushing back. These economies now have the lion's share of hard currency reserves in the world, of gold. They certainly have the lion's share of the rare earths that we need

if this electric vehicle revolution is ever going to properly get off the ground. So an OPEC is part of that. This bricks and OPEC are now overlapping to challenge sort of G7 NATO. That process was happening anyway through a natural growth, you know, as they get more of the population, as they get a bigger share of the world economy. You know, the bricks combined now are bigger than the G7. That's been the case for a number of years.

But the war in Ukraine has accelerated and accentuated a process that was already happening, a process that's shifting power away from the West and towards the East. And I'm not saying this because I'm some kind of anti-Western person on the contrary. I'm just trying to be realistic about what's happening. And political analysts and investors, business leaders, you know, any aware citizen sitting in the West needs to understand that this is happening. Because we don't like to talk about it very much in the West because it's awkward and it has a sense of the end of history about it. But that doesn't mean it's not true.

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Liam, you've been talking about OPEC and BRICs and there'll be people who are not economists who are not Ophay with this. Can you just break it down for us what these two terms mean? Yeah. And also, what is it they represent and what is it that they want? So they're separate, but they're a bit overlapping. So OPEC is the organisation of petroleum exporting countries. It was founded in Rabat in Morocco. It was originally very much an Arab organisation,

and it really burst onto the world stage in the early 70s when you had the Yom Kippur War. And in response to, as they saw it, Israeli aggression, the Arab countries basically said, right, we are going to make life really difficult for the West, particularly for America, that supports Israel and, you know, talk to anybody in America of a certain age, and they'll remember the huge gas cues.

It's when American cars stopped being, like, massive, as they are in Starsky and Hux and started to get small and compact in Japanese. They went away from gas guzzlers towards cars that were more cost-effective in terms of fuel. So that's OPEC. And OPEC has had lulls when it's been less powerful, less coherent, because it relies on all the countries agreeing that they're going to cut at the same. same time. Otherwise, you can get free rider things happening where countries don't cut, but they benefit from the fact that the price has gone up because others have cut. So that's OPEC.

And it has become very fashionable in Western capitals in recent years to dismiss OPEC as a spent force, the amount of sort of op-eds I've seen in posh Western newspapers. But you can't deny the numbers. And the numbers are, as I've said, OPEC controls a huge share of both production daily and global reserves. But now what's new is you've got a proper semi-formal linkage between OPEC and that other massive energy giant in the world, Russia, right? And that's based on the relationship

between Mohammed bin Salman and Vladimir Putin, which was forged, by the way, in the Moscow World Cup. It's no coincidence that the first match in the Moscow World Cup was Saudi versus Russia, the host nation, and there's an incredible photo of Putin and bin Salman sitting next to each other, watching that match. And they're literally sort of hugging each other. So that's OPEC.

And the BRICS is something different but related. The BRICS emerged in the early 2000s as a sort of informal grouping. It was originally a kind of an investment idea. You want to invest in these big emerging markets because that's where the growth is. That's where the global balance of power and economics is shifting. That's where they're growing middle classes.

That's where the money is going to be in the future. But since they were agglomerated in that sense, these five countries, Brazil, Russia, India, China, and more recently South Africa have really worked at coming up with coherent positions on certain things. And they've worked at coordinating currency swaps between their central banks, as I said, setting up their own ratings agencies, that aren't dominated by the US and the UK, setting up their own payment systems.

There's talk about them set. Well, they are now. I mean, Chinese and the Russians, they settle their energy trade. So this is the biggest, one of the biggest energy exporters in the world and one of the biggest energy importers. And they settle their energy trades, not in dollars, but in RMB and roubles, right? Now, any student of economic history will tell you, crikey, that's amazing. because petro currency status, all oil transactions are settled in dollars, right? That is the bedrock of America's and the dollar's reserve currency status,

and reserve currency status allows you to issue your own currency, and the rest of the world treats it as a hard currency, right? So as DeGall said, of America's reserve currency status, why are we all paying the interest on Uncle Sam's debt? It is the exorbitant privilege of being the world's reserve currency. It used to be the Brits in the 19th and the 19th century, the pound as good as gold. It was literally as good as gold.

That's where the phrase comes from. And then it became America in the mid to late 1930s, consolidated at Bretton Woods. And America's had reserve currency status. And a lot of people are jealous of that. The Europeans were jealous of that. That's why they wanted to set up the euro, the single currency. But now the Chinese, the Indians, the Russians are jealous of that. Liam, may I jump in with a layman question?

How sustainable is this? Because once you've got all these R&B, you're going to have to spend them on something and they don't trade enough with each other in that way, do they? That's absolutely true. And that's why the pushback argument is that so much of China's wealth is in dollars, why would they want to undermine the dollar?

And I would say, yeah, but these things don't happen overnight, you know? You only really know that the world's reserve currency has switched when you look back in five years' time and you think, oh, yeah, that was probably the moment. But clearly, the dollar is on the way. I mean, the dollar's going to be probably the main reserve currency for the rest of my life. These are very long-term trends. But I do think there's a move now, particularly after quantitative easing,

when Western Central banks spat the dummy and massively undermine their own reputation for management by creating so much money on the fly. I do think countries are now looking at different ways of storing their currencies, in synthetic currencies, in cryptocurrencies, in agglomerated currencies, where you have a basket of currencies and then you create a new currency out of that and store your wealth in that. And these are the kind of things

that the brick leadership and the intelligentsia around this grouping are exploring. And it's impossible to ignore them because what they're actually doing really interesting work that a lot of people in the West are thinking of as well. Liam, I want to ask you something because the undertone to everything that we're talking about here

is essentially what Vladimir Putin's been talking about, which is the move away from a mono, unipolar world in which America is dominant and absolutely in control of everything and the West sort of works with it to a multipolar world. That's the undertone to all of this. And the question for me is how much of this is self-inflicted? Because you mentioned already the fact that we're debasing our currency on a daily basis, basically print a crap ton of money irresponsibly, in my opinion, saddle our own grandchildren with debts so that we can spend money that we don't have today. You're nodding along to this. How much of it also, this is less the case in the US where they're still

producing energy, but in this country where we've got all these lunatics running around, shutting down traffic and whatever, screaming, just stop oil, when we need to produce our own energy because ultimately we're going to have to buy it from the Saudis or from the Russians or from the whewers if we don't produce ourselves. I think part of it isn't self-inflicted because in the West we've we've all acquired what seemed now to be compulsory luxury views. You have to think certain things or you're a bad person. I mean, the three of us involved in this conversation, and I'm sure many trigonometry viewers and listeners,

they have views that upset other people at dinner parties, but that doesn't mean that they're wrong. And I think the media has a lot of blame to share here. Our media in the UK, it's meant to be a very vibrant media, very sophisticated media, It is both those things to a degree, but it's suffering, in my view, certainly in the mainstream, from an absolutely chronic lack of diversity. Now, I don't mean that there aren't enough women or brown people on the screen. There are lots more women and lots more brown people than they

were, and that's absolutely fantastic. I have full support and admiration for that trend. But as that's happened, at the same time, unrelated, but at the same time, we have had an absolutely cataclysmic drop-off in genuine cognitive diversity. The range of views that you're allowed to have, the Overton window has shifted left and tightened to a tiny little porthole. And if you haven't got your face in that porthole, then you're a bad person. And a lot of it is around this issue of luxury views. So, for instance, Rishi Sunak's just been absolutely walloped by a lot of his own party, but certainly by most newspapers and most broadcasters because Rose Bank has been given the go-ahead.

That's the biggest untapped field in the North Sea that we know of. And Rose Bank is about 80 miles off of Shetland. It's relatively accessible by North Sea standards. And now finally, a UK-listed company, Ithaca and the Norwegian state energy giant Equinoor are going to develop that field. and it's got 300 million barrels of oil at least, right? So that's enough to keep the whole world going for three days,

which doesn't sound a lot. But it is. But it is absolutely huge. And it's 8 billion quids worth of investment. It's 2,500 jobs as the GMB union, one of our main unions, keeps reminding the Labor Party. Labor, fame, you know, in the typical fashion, they don't agree with what the Tories are doing on Rose Bank

because that will upset their environmental lobby, but they're not going to reverse it. because that would upset their blue-collar, you know, GMB union lobby who want those jobs for their members. But it makes complete sense to me that we should be using our own energy from the North Sea. I mean, why? Because there's something within the British establishment now called the Climate Change Committee.

That's the government's own in-house green watchdog that has statutory powers to sort of push and goad and chide ministers if they're not doing everything that they should be doing to get us to net zero in 2050. Even the Climate Change Committee admits that we will be using oil and gas by the mid-2030s for 50% of all our energy, right? Even if it's currently 70 by the way.

The Climate Change Committee says it will still be 50% of all our energy by mid-2030. And that's if the Climate Change Committee's own estimates for the take-up and efficiency of renewables, the improvements they're in are met. And a lot of people think they won't be met. A lot of people think they're far too rosy and too optimistic. So we'll be lucky to be only 50% oil and gas by the mid-2030s.

It'll probably be higher. And even the Climate Change Committee, they say that when we are at net zero in 2050, then we'll still be using oil and gas for around 25% of all our energy. So if we're going to use oil and gas, use our own, because it's cheaper. it means we get the jobs the tax revenue and the prosperity

and it's far less carbon-intensive. What's the alternative? The alternative is you drill gas in Dakota, you put it through a pipeline to an LNG terminal in the States, you liquefy it, which is massively carbon and energy intensive. You put it in a tanker

that goes 3,200 miles across the Atlantic, diesel-powered, by the way, and then you regasify it at Milford Haven or somewhere else in mainland Europe, or massively energy intensive, but at least we can then tell ourselves, oh, this isn't our carbon footprint. But it is.

We have to be smarter about this. It makes huge sense to use our own North Sea oil and gas, given that even under the most Panglossian, the most rosy assumptions about our pathway towards net zero, by the climate change committee itself, we'll still be using an awful lot of oil and gas for the rest of my life. So rather than just say, as the Green Party does,

is morally obscene, get real. You're going to need oil and gas, at least until 2050, probably for a lot longer. It's cheaper and it's more environmentally friendly to use our own. But that's the thing is you're putting forward a pragmatic argument. And we don't do that anymore, because we just like nice little sound bites and make us feel good. Yeah, that's true. That's true. I mean, it's, you know, economists have been the dismal scientists for years. I mean, that was originally a quote because economists used to warn that because populations grow geometrically, but crops grow arithmetically that would be subject to starvation. Of course, it never happened because technology came in and so crops could also grow geometrically, not least with the Green Revolution and pesticides, fertilised and all the rest of it. So, ma'am will find a way.

And I do think we will find a way that I'm not against for any... moment, the transition away from fossil fuels, right? I want a cleaner country, a cleaner world for my kids and my grandkids. It makes sense to move away from fossil fuels. You know, I'm a huge advocate of hydrogen. I think hydrogen is a sort of Cinderella. But we're now in a point, and this is one of the upsides of the ghastly war in Ukraine that you and I've talked about in the past quite a lot, Constantine. One of the upsides is that energy security is no longer something the only sort of spectrumy nerds like me go on about, right? It's actually people come up to me in the pub, right,

and ask me about energy security. People come up to me in the pub and ask me about OPEC these days. And that would never have happened two or three years ago. And I think what's emerged from this war in Ukraine, the impact on energy prices, the impact on the cost of living, the fact that people's house prices have fallen,

and they're feeling a lot less financially secure than they were. They're a lot more worried about their own future. and their children's future, what it has done, it has allowed to burst through these kind of luxury views and these lazy end-of-empirate assumptions that what matters is your feelings and your position in a kind of social hierarchy of do-goodery. What's happening now? Those things are being shifted away and we are suddenly having a real conversation about net zero. how much, when, for how long, and who pays. Right.

Who pays? Now, it was always madness to think you could possibly implement these massive changes without taking the population with you. Now, there's a sort of de au on bar view in the UK, not least from a lot of our senior broadcasters, that if they say something, it must be right. And my God, why did you vote for Brexit, you stupid plebs? You should be dead.

you know, we've told you what to do and we get our own way because we are the ruling class. There's still a lot of that in the UK. But now there's pushback, pushback from below. And politicians who understand that there's pushback from below, not because people don't want to clean a planet, but because their white van on their driveway is their living.

It's their ability to pay their kids lunch money, to pay their bills to keep a roof over their family's head. And if you're telling them that they've got to junk that van and buy a massively overpriced electric van, which will instantly fall in value because the secondhand market for them is terrible. And, you know, if it goes wrong, you might as well buy new vans. It's all about the battery. You can't fix it yourself. Then there is going to be pushback against that. And we are now seeing that pushback. But it's taken a war in Ukraine and some ghastly geopolitics in order to kickstart and bring that debate about. But at least it's now

happening, Francis. At least we can now have a discussion and raise issues about net zero, not about the ultimate direction of travel, but the speed and the cost and the distribution of those costs. We have to have those discussions. Because if we don't have those discussions, this isn't a democracy. And if we don't have these discussions, we're never going to get there anyway. The whole cause will be solid because it will just end up in acrimony and rancour. Because, and it's such a great point, because no one's voted for this. No one's agreed to this out of the ordinary populace. It's been foisted upon us. And then you go, right, well, it would be a controversial policy to introduce if the economy was booming.

The fact that everybody is struggling now, and now you're going to place this on top of everyone, I mean, it's pretty much, that's a recipe for civil unrest, if you think about the poll tax. Now, you know that, and Constan knows that, and I know that, but in the aftermath of Rishi Sunak pushing the ban on petrol and diesel cars back from 2030 to 2030 to 20. 2035, which is where it is across practically the whole of the European Union. In the aftermath of that, and in the aftermath of Sunak saying, you know what, we really do need to do a bit of drilling in the North Sea, even though there's still a 75% windfall tax on North Sea profits. You try doing a complex capital-intensive project in a hostile environment where suddenly the tax on your profit goes from 30% to 75% in a few months.

It's very, very difficult. But you and I and Constantine, we, know instinctively that while there'll be very vociferous, loud, gobby critics of these slight retreats away from net zero, we know instinctively that an awful lot of silent people in the UK are going to go, yeah, it sounds about right to me. I'm glad he's done that. And so what's happening now is that Rishi Sunak, after a year in office, where he's just been fighting events, he is now suddenly, belatedly, finally starting to do some politics. And so he's starting to do some politics. And he started to do some politics, and his standings, his ratings have actually gone up while he's been doing this stuff over the last couple of weeks, even though the response from the

vast majority of the media, particularly the broadcast media, where most people get most of their news, most of their time still, has been almost overwhelmingly negative to the point of being hysterical in some cases. I like the move away from fossil fuels, right? But I've given you, I think, a very coherent argument about why even people that want to move away from fossil fuels should understand that it makes sense given those climate change committee assumptions

on our use of oil and gas going forward for decades to come to use our own. Well, look, mate, ultimately, we live in a democracy, right? So the people have to be brought along with it and they have to be asked and they have to give their consent and there's plenty of other issues on which that isn't really happening. Thanks, as you say, to the fact that there seems to be a lock

on certain issues and the way that the mainstream has this conversation. And so I'm glad we're able to have that frank conversation here, which is one of the reasons I love doing our show and having you on it. Do you have a website or do you plan to have a website? Because if you do, then EasyDNS is a company for you. EasyDNS is the perfect domain name registrar provider and web host for you. They have a track record of standing up for their clients, whether it be cancelled culture, de-platform attacks,

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of your last book, which I think we should spend a little time on because it's an issue that affects almost everybody in this country, whether they own property or not, which is we have seen something which you've actually been calling for, at least the end result, which is for house prices to slow down in terms of rise. It's probably not happened the way you would have wanted because it's not happening because we're building more houses. What is the future of interest rates and the housing market in this country, in your opinion? Well, interest rates in the UK, the base rate's currently at 5.25%. I think a lot of people assume that's now the peak and the next move will be down. Certainly a lot of mortgage companies are now offering mortgages, five-year fixes,

low 5%, so below where the Bank of England base rate is. So that means they must think the next move is down and it's going to go quite a long way further to compensate for the fact that they're offering a sub-base rate, mortgage rate at the moment. I think that would be my central assumption with the caveat that I mentioned earlier. If OPEC plus wants to turn the screw and put another oil price spike, energy price spike upon us, even though the Bank of England, and anything it does with interest rates wouldn't impact that at all, the optics of the Bank of England, lowering interest rates when inflation is going through the roof for whatever reason,

is very, very difficult, and they'll be seen to lose credibility. So we might yet see more interest rate rises courtesy of OPEC plus. I just put that out there. But let's assume that's not the case, and assume that interest rates are going to come down. In the end, we've still got massive housing unaffordability in this country. Yes, prices have come off for a little bit, but the average multiple to buy the average home in the UK is still eight to ten times annual income, right? And when I bought my first property in the mid-90s, it was four to five times.

And four to five times is a sort of long-term historic average. And that kind of makes sense because if it's four to five times, you save like mad, right? And then you get a mortgage on the income of one of you for three, three and a half times. And then your family chips in and makes it. the other person in a couple is doing a bit of part-time work, a bit of childcare. So you can get to four or five times. An ordinary family can buy an ordinary house in an ordinary situation. But when it's nine or ten times rising to sort of 15 times in London and the southeast

and even more in some even not particularly swanky areas, then it's completely prohibitive. Right. How can you possibly, how can a professional couple working full time, even before childcare, they can only borrow six or seven times they can buy. salary. I mean, it's mad. And that isn't going to change just because we've seen house prices come off a little bit because of interest rate rises. We need to build more homes. Now, you kindly mention my book Home Truths. The point of that book was to highlight the fact that big oligopolistic house builders, massively important house builders, the top 10 house builders building about

70% of our homes now. They control what gets built where and what pace. They hoover up most of the planning permissions. The problem isn't that there isn't enough planning permission because there are over a million planning permissions outstanding held by these big companies that don't use them because they want to deliberately not use them because they want to stop the little builders that build quickly for cash flow from getting those. They're like OPEC basically, as a way they're saying. Massive restrictive practices. They would deny it. I mean, that's why, you know, I've talked to Michael Gove a lot about this and he's read my book very closely. I've spent a lot of time with him.

He ended up in a speech calling the big house builders, quotes, a cartel. Now, this is a public forum. They deny that. There's no prior evidence that they are that, because of course a cartel is illegal. But they are definitely an oligopoly, which is a small number of producers deliberately restricting supply. The House of Lords said that after an extensive investigation back in 2016. And I think partly as a result of the book and the speeches that Gove has given, the competition of markets authority is now conducting an investigation into big UK housebuilders

to see if there are restrictive practices. Now, who knows what they'll come up with? Our regulators in the UK, you know, they could be quite herbivorous at times, a bit flabby. I'm sure they'll come up with a kind of, oh, it's the system, it's no particular, or very unfortunate lessons will need to be learned. I'm sure they won't get a slap across the wrist, but I think they should because our housebuilding industry is very good at drip feeding the market, generating contrived scarcity to keep prices high, to make more money building fewer houses on much bigger margins.

You know, a lot of house builders, they've got margins of 15, 20, even 25 and 30 percent, right? They're using basically Victorian technology. You know, this isn't rocket science. Look, I come from a long line of Irish builders, right? there's a big difference between a good builder and a not good builder. There's a lot of skill in building a home, right? But it's a not uncommon skill. It's everywhere. It's not like you're a tech company that's invented something.

So why are you getting 75 million quid annual bonuses among housing executives? Why? Because there are restrictive practices happening because there isn't any real competition happening because the house building industry isn't responding to massive, unmet supply by building more to keep prices relatively stable. They're deliberately building less. And that is a big, big problem, given that for the vast majority of people,

buying a home will be the biggest purchase that they ever make. Isn't that just corruption, then? Corruption is a difficult word. I've said, and I'll say again, and I'll say again, that they deny it. I mean, the whole animus of my book home truths is that there are restrictive practices going on in the UK building. industry. And it's up to regulators to try and eke those out. It's very difficult. It's very

complicated. But how else can you explain these massive margins? How else can you explain the fact that we build so few homes these days? Yeah, we haven't built a new town, a new settlement in the UK in my lifetime. And I'm in my early 50s. The last one was Milton Keynes. And yet, during that period, we've gone from 45 million to almost 70 million people. It's insane. The UK now has 420 homes per thousand, right? In France, it's 550. In Germany, it's 580.

That makes a huge difference. And it's not even immigration. A lot of people say it's immigration. France has had more immigration per year than we've had, right? But they've just built a lot more homes. And it's not even because France is bigger than us. We use 2% of our entire land at the moment. for residential housing plus gardens 2%.

The Greenbelt, the sacred Greenbelt, 13%. And far from getting concreted over, as endless Lib Dems keep telling us, the greenbelt is actually now more than twice the size in terms of acreage as it was in the late 1970s because councils keep adding to it. But in the end, we have to give young people the chance, the chance that my generation have,

the dignity of owning their own home, buying their own home. This is now seriously messing with our demography. People are not having kids because they're still living in shared houses into their early 30s, right? Pass that now. Pass that now. And Liam, so reading between the lines, they, if I'm an ordinary person looking to buy or sell a house or whatever, interest rates are likely to perhaps, you know, with the opaque exception, likely to drift down. I would wait. They're likely to drift down. At the same time, we're not going to, due to this oligopoly,

be building way more houses than we have been consistently. So that tells me that house prices are going to go back up. Well, I think house prices, they won't go back up a lot until interest rates come down a lot. Because what really drives the house price is the purchasing power of people on the demand side. I mean, maybe the government will do something really stupid, like another raft of help to buy,

which has been an absolutely terrible scheme. It's been good for some of the people, who are on it. But for the rest of the people, the vast majority you can't access it, it's just pushed up prices, given that it hasn't really led to more supply. A lot of houses built under help to buy. You could only get it for new builds initially were substandard. A lot of them didn't have, you know, fire protection in the cavity walls and so on. It basically consolidated even more the position of the big builders, because the big builders hoovered up most help to buy. The government might do some more help to buy if they're particularly stupid because

it's a nice, cheap, easy, quick headline. But aside from that, I don't think house price is going to spike up quickly because there is a nervousness about interest rates and inflation. And I think that nervousness will be with us for a number of years, even if the headline numbers start to improve. But if you are going to fix your home loan, as of now, late September, 2023, I would wait because I do think, aside from the OPEC whizbang, which I mentioned earlier, I do think the high probability is the interest rates will come down.

I don't think we're going to see ultra low, you know, half a percent, one percent, one and a half percent, as we did after the layman crisis and then all those endless years of quantitative easing. But I don't see any reason why we can't get back down to sort of three, four percent. And if you can fix a loan for five years at three or four percent, rather than four and a half or five percent, it makes an enormous difference to your family's finances. Liam, moving on now to the last part of the interview. Are you hopeful for the future economically? I am because, and I'm hopeful for the UK,

and I'm hopeful for the global economy, even though when I compare now to when I sort of came of age economically in the fall of the Bolin Wall and going to live in former Soviet Union and Eastern Europe during the early 90s, the sort of madness of the France's Fukuyama dictat. It's the end of history. And people like me saying, no, it's history. on speed if you've been to Eastern Europe.

They're going through like generational changes in four weeks, right? But what was Fukuyama saying? He was saying it's a unipolar world now. And as you said earlier, Constantine, it isn't a unipolar world. It's a multipolar world because that is the historic norm, a multi-polar world. But Liam, hold on. Just to challenge you on that, I think to say that it's a historic norm is true, but that's because the technological level of connection between the world was different.

It was much more difficult. You know, the Chinese Empire in the 8th century couldn't dominate the world. Sure, that's true. In a way that... So just distance made it, by definition, multipolar, right? Because you couldn't challenge all. But here we are at the height of technology. We're becoming more multipolar, right?

We're moving away from the unipolar world. So it's not necessarily... The relationship is complex, right? Yeah. Yeah, yeah. So am I optimistic? I am optimistic because I believe in the power of technology and innovation and human endeavor.

and even though being a journalist makes you kind of hard-nosed and cynical, I mean, most people I meet in the world and interact with are good people and they want to do well. I think this country in particular has not just the germ, it has the kind of in its bloodstream, it has real entrepreneurial genius and VIM in this country. And it's partly, I think, because of the big influx of immigrants that we've had over many years.

I know your family are Latin American, got Slavic guy here, you know, some paddy from way back. But we all feel that we're Brits, right? And a lot of Brits have these different identities and that gives them that kind of entrepreneurial edge. We create lots and lots of businesses. The world still wants to invest in us. We still get a huge lion's share

of all the foreign direct investment coming into Europe. You know, we've still got the vast bulk of the world-class universities in Europe in this country. It's easy to carp, and it's easy to say things are wrong. wrong. And it's for people like us with platforms to constantly, you know, criticize and to prod and to poke and to test and to question, right? This is what we do. That's why people want to hear what we've got to say, because that leads to progress. But you also have to occasionally step back and say in the face of people who are constantly negative the whole time in order to make themselves sound good in their

own eyes. You have to push back and say, well, look where the UK is compared to other countries at this point, and look where the UK is compared to 20 or 30 years ago. And on most fronts, even in the middle of a cost of living crisis, there's never been a better time to be alive. Now, I know, you know, we've been through a lot in this country. We've been through all the political turmoil, the independence referendum and Brexit, then, you know, the fiasco that was locked down, and then this war in Ukraine, which has obviously been really, really stressful. And we're, you know, thousands of miles from Ukraine. It sounds ridiculous, given that people actually dying and and genuinely suffering.

But economically, the war in Ukraine has been very testing for us. And I think it could easily get more so. But I still remain optimistic because I think we are an entrepreneurial country. I think there's a lot of vim and vigor here. And in the end, unless you're optimistic, you might as well get out of bed. Yeah. Liam, we talked purely about economics, which is fascinating, as always. just before we let you go, a quick political question,

which is we obviously have an election coming up next year. How do you see things going as they are at the moment? Well, as they are at the moment, you have to be a brave man to bet against certainly Labor as the biggest party, if not with a full majority. I think that's a much bigger assumption. But a week's a long time in politics, and we're still months away from this election.

And so, you know, the Tories could yet turn it round. and surprise people. I mean, I'm not saying that's the most likely outcome, but I don't think it's a very unlikely outcome. It could happen. I think the SMP are going to get whacked. I think they've really suffered as a result of the way Nicholas Sturgeon left office

in a very kind of disorderly manner. I don't think their current leader is particularly impressive with all respect to him. On the contrary, I think Labour's leader in Scotland, Anna Sawa is a pretty impressive guy, and he's certainly making headway. But I think the Tories could yet salvage some kind of comeback, enough at least to make Labour not the biggest party. Or even we could have a 1974 situation where you have two elections

in succession. I think it genuinely could be that close. But as always with politics, it depends on the economy stupid, as Clinton's right-hand man, James Carville said back in the day, if they can turn the economy round, if they can get inflation down, if they can get a feel-good factor going, if they can get some young people on the housing ladder, if they can start building some social housing, something that we haven't said. That's the way to unlock the red wall. Start building some social housing so people can be more assured that their kids are going to have a roof over their head if they're from a low-income background. Then I think the Tories could yet pull off a surprise. That's an outside bet. The odds are long, but I'm just putting it out there as a

possibility. Well, Liam, it's such a pleasure having you back on, which is why I'm really looking forward to what our audience want to ask of you on our local sections. Before we head over to locals, though, as you know, our last question is always the same, which is what's the one thing we're not talking about that really should be? I think we should be talking a lot more economically about the Pacific Rim. The Pacific Rim is the fastest growing area of the economy in the world. The UK, as you know, has just joined the CPP, TPP. That's the comprehensive and progressive trans-Pacific partnership, a big trading block. I think it's a great achievement that we've joined that block. And yet, people don't really understand the economic power of that block. I think the government

should be talking more about that. We should be encouraging more of our people to export out there, work out there, live out there. The Brits have got a great track record in different historic circumstances of living and working and driving economies in different parts of the world. And we should continue to do that because we're good at that. Because, you know, you've got the language that's spoken everywhere, the rule of law, the way we structure contracts, the reputation of our universities, the extent to which our sort of popular culture is loved, you know, the Premier League, comedy, all the rest of it. We should be making use of that and we should be trying to encourage our young people to make their way overseas, building their own futures, particularly around

that Pacific Rim, because that is now the economic. centre of gravity of the world, not the state. Liam Halligan, thank you so much. Follow us over to locals where we ask Liam your question and also chip in if you are our own. See you there. What should the UK be doing to take advantage of the opportunities presented by leaving the EU?