Return to Transcripts main page
Quest Means Business
Incoming British P.M. Inherits Struggling Economy; Energy Costs Soaring For Businesses And Consumers In U.K.; Next U.K. Prime Minister Faces Calls For Economic Relief; Liz Truss To Replace Boris Johnson At 10 Downing Street; UK Pound Touches Lowest Level Against US Dollar Since 1985; EU Outlines Plans For Price Cap On Russian. Aired 3-4p ET
Aired September 05, 2022 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:23]
ISA SOARES, CNN INTERNATIONAL HOST: European stocks lost ground today on concerns about the energy supply. Most of the major indices closed lower.
The FTSE 100 Just eked out a gain. Wall Street is closed for Labor Day.
Those are the markets and these are the main events: Britain's next Prime Minister pledges to cut taxes and control energy costs, Liz Truss is set to
succeed Boris Johnson tomorrow.
European natural gas prices spike after Russia turns off a key pipeline.
And small businesses in Britain prepare for a difficult winter.
Live from London. It is Monday, September 5th. I'm Isa Soares in for Richard Quest and I too, mean business.
Good evening, everyone. Welcome to the show.
And so we are coming to you live from outside the Houses of Parliament. Tonight, Liz Truss says she will deliver a bold plan for the UK as the
country's next Prime Minister.
The Foreign Secretary was voted Conservative Party leader over her rival, Rishi Sunak. She will officially take over as Prime Minister from Boris
Johnson tomorrow. Truss faces multiple crises, and that includes soaring energy costs, labor unrest and the war in Ukraine.
Analysts are skeptical, they have proposed tax cuts would help. Earlier today, Truss told party members they will get the country's economy back on
the right track. Have a listen.
(BEGIN VIDEO CLIP)
LIZ TRUSS, INCOMING BRITISH PRIME MINISTER: My friends, I know that we will deliver, we will deliver, we will deliver.
(END VIDEO CLIP)
SOARES: So, she will deliver. Truss' political career has evolved from being an anti-monarchist in her youth. Now, many are comparing her to
conservative darling, Margaret Thatcher.
Our Bianca Nobilo has the story.
(BEGIN VIDEOTAPE)
BIANCA NOBILO, CNN INTERNATIONAL CORRESPONDENT (voice over): Britain has a new Prime Minister, an ambitious political chameleon.
TRUSS: I know that we will deliver, we will deliver, we will deliver.
NOBILO (voice over): Liz Truss' unlikely ascendance complete. Her leadership campaign got off to a shaky start. She couldn't even find the
door. Notoriously gaffe-prone.
TRUSS: We import two-thirds of our cheese. That is a disgrace.
NOBILO (voice over): Tactless about Britain's closest ally --
UNIDENTIFIED FEMALE: President Macron, friend or foe?
TRUSS: The jury is out.
NOBILO (voice over): And mocked by Russia's Foreign Minister.
SERGEY LAVROV, RUSSIA FORMER MINISTER (through translator): It seems like we listen, but don't hear.
NOBILO (voice over): The former Foreign Secretary was widely considered to be less informed and less willing to be scrutinized than her rival, Rishi
Sunak.
But that didn't stop her because she wasn't appealing to the wider British public. One of two candidates selected by Tory lawmakers, Truss was
ultimately chosen by less than one percent of the British electorate, a sliver of the Conservative base older, whiter, and more right-wing than the
average voter.
She played a blinder --
UNIDENTIFIED MALE: Enough already.
NOBILO (voice over): Promising a hardline on immigration and tax cuts to a party drifting further to the right, channeling their hero Margaret
Thatcher, even dressing like her.
NOBILO (on camera): Like half of Britain's Prime Ministers, she studied here at Oxford University. But back then, she was a liberal Democrat
activist in favor of legalizing cannabis and abolishing the monarchy.
TRUSS: Abolish them, we've had enough.
NOBILO (on camera): Now, she is the darling of the right-wing of Britain's Conservatives, the pro-monarchy party of law and order, quite the 180.
And when it comes to Britain's biggest political question over the last decade, Brexit, she supported remaining in the EU, only to reemerge as a
born again, Brexiteer, and the U-turns continued.
NOBILO (voice over): Before graduating in 1996 with a degree in Politics, Philosophy, and Economics, Liz Truss campaigned alongside Neil Fawcett for
two years.
NEIL FAWCETT, LIBERAL DEMOCRAT COUNCILOR AND FORMER TRUSS COLLEAGUE: She certainly always seemed to be very ambitious, and sometimes you thought her
main aim was to impress people, but she was always playing to the gallery.
She would say what needed to be said to win popularity amongst the people she was in front of at the time.
NOBILO (on camera): Do you feel like she does have substance?
FAWCETT: I couldn't tell you what she actually believes.
NOBILO (voice over): Her supporters though see flexibility, independence of mind, and a boldness.
CHRIS SKIDMORE, BRITISH CONSERVATIVE MP: She doesn't take no for an answer, she said, and I've seen that as a Minister myself, in private. You
know she can be direct, but she is also very warm and I think that has endeared her to many MPs.
[15:05:07]
NOBILO (voice over): Truss inherits a nightmare: A war in Europe, a biting cost of living crisis, the country braced for a winter of potential
blackouts and fuel poverty.
(CROWD PROTESTING.)
NOBILO (voice over): Britain is desperately hoping she will leverage that ambition and adaptability to rise to the challenge.
Bianca Nobilo, CNN, London.
(END VIDEOTAPE)
SOARES: While Truss is facing the most difficult economic situation in decades, that is clear, energy costs are skyrocketing amid Russia's war in
Ukraine. Natural gas prices rose almost 96 percent in the last 12 months as you can see there, to July, 95.7 percent.
Higher energy is, of course, driving a cost of living crisis here in the UK. Inflation is more than 10 percent in the UK, that is the highest in the
G7 and the Bank of England is warning, it could go even higher.
Now in response, Truss says she plans to cut taxes. She also may freeze energy bills.
Our Anna Stewart is with me live from London and she joins me now. Anna, so talk us through what plans you have heard as to how Liz Truss is going to
tackle this energy squeeze and this cost of living crisis.
ANNA STEWART, CNN REPORTER: Well, a few British Prime Ministers have actually taken the reins of power with the economy in such a dire state,
and it is curious, isn't it? Will she introduce a maverick plan to turn around the economy? Will we, all years from now we talking about Liz Truss-
onomics.
You mentioned some of the plans: She wants to lower taxes, she wants to help with people's energy bills. But other than that, we haven't heard too
much. It's too early really say, but here is what is on her economic agenda as she starts on day one.
First of all, this is what she needs to tackle inflation. In the UK, over 10 percent. That is higher than the Eurozone, it is higher than the United
States. In fact, it is the highest of all the G7 nations, and it is not going to stop there because the Bank of England expects it to hit 13
percent before going lower.
And in the worst case scenario from investment bank, Goldman Sachs, next year, it could top 22 percent. That's their worst case scenario.
Of course, the major driver of all of this is energy prices. Now, this is the UK's energy price cap, if we can get it up here. Now, this is the
maximum that energy suppliers can charge households, and it rises in line with wholesale prices as you can see here.
This is April of last year, Isa. This is what the average household paid a year for their energy bills, 1,138 pounds. Well, fast forward to next
month, October for the latest rise, it is expected to over triple for the average household. That is vast.
Then in January, keeping up with the next rise, it could hit 5,386 pounds. That is five times more than it was in April of last year. That Isa, is
simply unaffordable for much of the country. And in fact, according to Charity National Energy Action, one in three households will enter fuel
poverty next month.
Now, the British pound slumped to its lowest level since 1985 earlier today, at one stage dropping below this $1.50 mark, and that was because
the energy crisis has taken a turn for the worse.
Now on Friday, you'll remember Russia's energy company, Gazprom said it would indefinitely cut gas supplies to Europe through the Nordstrom 1
pipeline. So, that is why it has been under pressure, as has the euro in fact, today as well.
And you know what, I think investors may be feeling a little bit nervous about Truss-onomics because this next Prime Minister wants to lower taxes,
she also wants to help households with their energy bills and that sounds like the UK government will need to borrow a lot more and that could push
up inflation even higher.
But we need the detailed plan. She said there is one. It's bold, and we just have to wait to find out how she is planning to fund it -- Isa.
SOARES: Yes. On that note, I mean, she is calling a bold plan, like you clearly stated, Anna, we are lacking the details. Hopefully we'll get it in
the next week and a half or so.
But in terms of funding it, that is the big question. So, what are you hearing from investors? How exactly is Liz Truss hoping to fund this?
Because it's just going to increase borrowing, isn't it, in the long term?
STEWART: So in the many, many interviews we've had from this six-week leadership contest that has been going on for a really long time, there
have been questions about funding. And generally, I would say Liz Truss has talked about fiscal headroom and how she believes there is still space to
borrow more, despite the fact that of course the UK borrowed a lot during the pandemic. And actually, in terms of debt to GDP, we're looking at some
of the worst numbers we've seen since the early 1960s.
But I think this is the important one. This is what the pound did.
Now part of this is a US dollar story. The US dollar is strong. Part of this is gas worries, but also this could be a loss of investor confidence,
and this is something we really have to watch.
We have to watch bond yields. We have to watch Sterling. We have to see what people are going to think of Liz Truss' plans when it comes out. But I
think there is a big fear that borrowing at this stage and fueling inflation will only entrench it, I mean even more rate rises for Brits who
are already struggling with their mortgages and savings.
So, it is going to be a really interesting plan and we're going to have to delve into the details, I think.
[15:10:08]
SOARES: Great breakdown there from Anna Stewart, really on the unprecedented, what you've just laid out, Anna, unprecedented challenges
that Liz Truss faces.
Anna, thank you very much.
Well, London's Mayor Sadiq Khan says Truss' policy should aim to help all British citizens. He warned against focusing only on those in the north
while neglecting the capital.
I spoke with the Mayor earlier. He told me he's never seen economic pain, as bad as it is currently. Have a listen.
(BEGIN VIDEO CLIP)
MAYOR SADIQ KHAN, LONDON: I've lived in London for 50 years now, more than 50 years and lived through the recession in the 80s. I've lived through the
global financial crash in 2008. I've lived through the pandemic. I've never known families and businesses struggling like they have.
I speak on a daily basis to moms and dads who told me and they've been honest, they have skipped a meal so their kids can eat. I spoke to
pensioners. This summer we had a heatwave and a drought. Pensioners are not turning fans on because they're concerned about how to pay the bill this
summer.
(END VIDEO CLIP)
SOARES: The London Mayor saying I've never known economic pain like now.
Philip Shaw is the Chief UK economist at Investec. He joins me now. Philip, great to have you on the show. We've heard so much today about Liz's bold
plan, she herself is calling it a bold plan. We're expecting to hear more of it in the next week or so.
Before you tell us, you know what her plan might include, what does it need to include? What needs to be there in terms of policy?
PHILIP SHAW, CHIEF UK ECONOMIST, INVESTEC: Well, okay, I think there is general acceptance that there needs to be a degree of protection for
consumers facing an 80 percent hike in their domestic energy bills that comes on top, as we've heard of a 54 percent rise in April, as well, and
particularly the needy and vulnerable will be needing income support or price reduction.
So, that's generally accepted. And of course, the businesses and that's often neglected, the small businesses in particular, are going to find
themselves squeezed, and businesses don't have the benefit of a price cap as well.
So, you know, we'd expect something fairly radical and fairly large to help those groups of people.
On top of that, what Miss Truss has been talking about is a fairly large shopping list of tax reductions, and they would include, for example,
reversing the National Insurance contributions increase in April, which was raised by one and a quarter percentage point, and abolishing a 6P increase
in corporation tax next April.
There are others on top of that. The danger is, I think, from the financial market or an investor point of view is that it's too bold. In other words,
you're adding too much to demand and potentially inflation, just when the Bank of England is raising rates to try and quell inflation. And also that,
as you mentioned earlier on, how is this all going to be funded?
SOARES: Yes, that is the big question. It's bold. She clearly wants to try and keep the economy growing, whilst obviously it is pleasing every side,
every sector of the country. But the concern is where is she going to get the money for this? Because that is just -- as Anna was pointing out --
that's just going to add, of course, to the cost of borrowing and with consumer pricing with the consumer price lower that has a huge impact on
how people see the country and investment in the country.
SHAW: That's right. If the tax stimulus package is too great, the Bank of England will simply say, well, that's adding to inflation. It is not really
going to add to growth.
SOARES: Yes.
SHAW: And therefore, what you will see is interest rates rising, you know, perhaps not as far as two and a half percent as we're currently forecasting
at the moment, but perhaps to four percent or above, and that itself will cause pain to both households and businesses.
So, in a way, cutting taxes by too much is going to be counterproductive.
SOARES: Well, you know, Rishi Sunak, her rival, of course, he had a very different vision in terms of cuts, and he actually said that her vision,
Liz Truss' was not fair. Do you think in terms of cutting taxes, do you think that's fair?
SHAW: Well, I think it's fantastic to have an aspiration of cutting taxes and Miss Truss herself as a new Margaret Thatcher.
When Margaret Thatcher came to power in 1979, she did begin to cut income taxes, but wants to cut them to 25P in the pound, from I think they're
originally about 33P. So we had a small cut in income taxes in the first year or two.
But it took her something like another nine years to achieve what she wanted to.
SOARES: She doesn't have that long, though.
SHAW: Well, that's the great precedent, isn't it? That you have an aspiration and you reduce taxes, you know, when it's prudent to do so.
SOARES: So you know, what you're telling me, what you sound like her aspiration, it sounds like she's not going to be able to deliver on all of
this. Right? Is that what you're telling me? That she's going to have to pick what is the most fundamental need right now?
SHAW: I think if the choice is between a modest set of tax reductions and of course helped households and businesses, and interest rates rising just
a little bit or a massive cut in taxes and interest rates rising sharply, then the prudent course of action would be to say, "Well, here's a little
tax cut; we will save some in reserve for later when it's safe to do so," and actually, when the public finances arguably are in a better state to
afford a tax cut.
SOARES: What do you think, Philip, her relationship will be with the Bank of England? Because just from what we've heard in terms of campaigning,
because she wanted to kind of change the mandate, didn't she, at least hinted at that during much of her campaigning? What do you think we'll see
from her?
SHAW: We don't know, and that is one of the big unknowns about what the government is going to do with the Bank of England.
We did hear about changing the mandate. Of course, the Bank of England on the monetary policy side is mandated to reach an inflation rate of two
percent at all times; of course, it's 10.1 at the moment, that's why Bank of England is raising interest rates.
More recently, I think Miss Truss has hinted that actually, the Bank of England's independence is sacrosanct and that won't be reversed.
So it's a big question, Mark. But I think she has moved to reassure investors that, you know, what we might have seen is some elements of Bank
of England's independence, set interest rates will be removed. It seems the direction of travel is not to do that at all.
SOARES: Very quickly, Philip, how soon does she have to get this bold plan in action? You know, so it can be felt, how quickly does that need to
happen?
SHAW: Well, I'd be surprised if she and some advisors hadn't already been thinking about it. We don't need to know full granularity straightaway, but
an idea of the direction. Some of the main points and the extent of the plan would be pretty helpful and fairly reassuring for investors to know
those points over the next few days.
SOARES: Philip Shaw, appreciate you. Thank you very much.
SHAW: My pleasure.
SOARES: Thanks for coming in.
Well, Russia has shut off gas to Europe and OPEC sales backed production. We'll talk about how Europe is dealing with the next chapter of its energy
crisis. That is next.
Do stay right here. You are watching QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
SOARES: Now the head of the European Commission says it is working on a plan to bring down energy costs as Russia cuts off natural gas supplies.
Ursula von der Leyen says the plan will reduce demand, cap the price of Russian natural gas, use windfall energy profits to help the struggling
households as well as help reduce energy producers deal with that price volatility.
[15:20:03]
SOARES: Well, the EU faces a steep road ahead. European natural gas prices spiked 28 percent this morning, the euro has been sinking, it hit a 20-year
low today against the US dollar.
Adding even more strain to the global energy market into that picture that we just pointed, well, OPEC+ says they're cutting production from October.
The producers are shaving 100,000 barrels of oil off their daily output back to August levels. It is the first production cut since the start of
the pandemic when the announcement, as you can see there is giving oil boost.
Brent and WTI Crude both up more well -- just over two percent. Actually, TWI up two and almost a quarter of one percent.
Clare Sebastian is in London.
Clare, plenty for us to get our teeth into here today. Let's start with first the impact of that shutdown of Nord Stream 1.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Isa, this is a real shock to the markets. Even though Nord Stream 1 was only pumping at 20 percent capacity
before this happened, before this scheduled maintenance, which Russia has now extended, that 20 percent still mattered, and we see this reflected in
the market reactions today, the euro plummeting.
The euro, by the way, has really been moving in sort of inverse lockstep with gas prices throughout the summer, really impacted by the gas
disruption that we're seeing. And then of course, the spike that we saw this morning in natural gas prices.
It was up over 30 percent at one point, European benchmark gas price is now back to up around 11 percent. That's a move by the way of more than 40
euros per megawatt hour. So, you see the volatility in that market playing out.
But make no mistake, the comments that we saw today about the Nord Stream 1 also revealed that if you have any doubt about this beforehand, this really
is an energy war playing out. The Kremlin spokesman, Dmitry Peskov saying that if -- basically implying very strongly that if sanctions are lifted,
then the disruption and the gas would flow again through the Nord Stream 1. He said the only thing that's causing this disruption is Western sanctions.
And then we heard from France's President Emmanuel Macron. Take a listen.
(BEGIN VIDEO CLIP)
EMMANUEL MACRON, FRENCH PRESIDENT (through translator): We are at war. Energy is one of the instruments of war used by Russia. We must put
ourselves in this position to produce alternative sources of electricity faster.
(END VIDEO CLIP)
SEBASTIAN: And this is playing out as we speak, Isa. Countries around Europe bracing to find alternative sources for energy. Germany in a very
dramatic about turn announcing today, it was expected, but this is still a big turnaround for the Green Party in power there that they will extend the
life of several or postpone at least the closure of several nuclear plants just for four months.
But this is still a turnaround for Germany to protect their electricity supplies through the winter.
SOARES: And of course, Clare, you know, here in the UK with the new Prime Minister, Liz Truss, who takes office, of course, officially tomorrow,
we're still waiting for details on that new plan, that bold plan from her in terms of what will how she will tackle the surging energy squeeze that
we're seeing and cost of living crisis.
We're seeing Germany already acting though. Talk us through their plan and what Europe is doing to try obviously, to put a stop to these surging
prices.
SEBASTIAN: Yes, so the countries in Europe, and in particular, Germany is the biggest economy in Europe and the biggest importer of Russian energy
before the war have a real balancing act to strike here, because on the one hand, they're trying to reduce demand for energy. That is one of the only
ways they say they're going to be able to survive the winter, particularly if the winter turned out to be cold.
So, they didn't want to go subsidizing energy too much. What they're trying to do is really targeted, a more vulnerable household.
Germany is doing this in a variety of ways, a new housing allowance, one time energy subsidies for low-income groups. There is some support as well
for businesses in Germany in this latest package worth some $64 billion. So, that's what they're doing as well.
And meanwhile, we're waiting to hear from European Energy Ministers. They will be meeting in an emergency meeting on Friday and the EU Commission
President, Ursula von der Leyen as you noted, trailing some of the things that they're going to be discussing including potentially using revenues
from energy companies to help more vulnerable households. This is something that the French President also supported today.
And very interestingly, potentially, a price cap on Russian pipeline gas imports to Europe. This would be risky. Russia has also said they will
retaliate against any oil price cap, any country signing up to an oil price cap which the G-7 is said to be implementing.
And you know, so you can expect that they will do the same for a gas price cap, so Europe has to tread carefully with this. It might be looking at a
full cutoff of Russian gas if it goes to a gas price cap -- Isa.
SOARES: And in the meantime, we have OPEC of course shaving off 100,000 barrels of oil off their daily output. Does that make any difference to the
price?
SEBASTIAN: It is not a large amount --
SOARES: It is tiny, right?
SEBASTIAN: It is not a large amount. It is particularly symbolic -- yes, it is really tiny if you think about the millions of barrels that OPEC+
produces every day, this is a very small amount.
[15:25:10]
SEBASTIAN: What it does is it reverses a nominal production increase that they announced for September back -- then in October, according to today's
announcements, they will revert to August output, so reversing the September increase, but what this does show is that OPEC is very concerned
about the price reduction that we've seen over the last three months.
Brent has come down more than 20 percent, very major fears about recession in Europe playing out, COVID lockdowns in China. They don't want to
increase production and then see demand fall, another wildcard there is of course, if the Iranian Nuclear Deal is revived, we could see Iranian
barrels come back onto the market, further putting downward pressure on prices.
Of course, the wildcard in all of this, Isa, is what happens when the EU embargo on 90 percent of Russian oil imports comes into force in December.
That could put two million barrels a day of oil in limbo, pushing up prices.
So, there is a lot at stake here, but for the moment, there are signals that OPEC and OPEC+, by the way including Russia is very concerned about
prices coming down and demand falling.
SOARES: Clare Sebastian there. We had a lot to go through. Really appreciate it. Thanks, Clare.
Now Bed Bath and Beyond says it is profoundly saddened by the death of its CFO. Police say Gustavo Arnal fell to his death on Friday. It comes amidst
a turbulent year for Bed Bath and Beyond.
CNN's Brynn Gingras has more on the story for you.
BRYNN GINGRAS, CNN CORRESPONDENT: Isa, Arnal being remembered as an esteemed colleague in the financial community, that coming from the
Independent Chair on the Board of Directors for Bed Bath and Beyond.
But Gustavo Arnal, 52 years old was also a father and a husband.
I can tell you that police found his body on Friday, a source telling CNN that he jumped from the 18th floor of his Manhattan high-rise, jumping from
the balcony and taking his own life.
We're told by a source that his wife witnessed this and that no criminality is suspected in this investigation.
The Board Chair going on to say about Arnal that he is instrumental in guiding the organization throughout the coronavirus pandemic, transforming
the company's financial foundation, and building a strong and talented team.
Now, Arnal served as the CFO of Bed Bath and Beyond for more than the last two years, and as we've been reporting, that company has been struggling as
of late. In the last week or so, we learned that the company was trying to avoid bankruptcy and by doing so, it was going to be slashing about 20
percent of its workforce, closing about 150 stores. And obviously, it is unknown if that had any impact on the decision by Arnal.
But we also know, he was named in a suit about two weeks ago. He is specifically named as a defendant in a class action suit in which he and
other stakeholders are accused of a pump and dump scheme essentially inflating the value of Bed Bath and Beyond before selling some of those
shares.
So, he was part of this suit with other stakeholders in that company. He's also accused of misleading investors about the company's strategic plan and
financial conditions in that suit.
Again, it's still unclear what caused Arnal to take his own life, but a source tells CNN that there was no suicide note left and that this
investigation is still ongoing at this point -- Isa.
SOARES: Brynn Gingras there with the latest. Thanks very much, Brynn.
Still to come right here on QUEST MEANS BUSINESS. She is being described as a political shapeshifter.
Up next, we'll take a closer look at who Liz Truss is and what she has planned to revive Britain's economy. That is next.
(COMMERCIAL BREAK)
[15:31:59]
SOARES: It is 8:30 outside the Houses of Parliament, very good evening to you. Britain, will have a new prime minister when Liz Truss takes over from
Boris Johnson. She inherits a dire economy. Energy as well as food costs are also soaring. The Bank of England expects inflation to reach 13 percent
in October. Goldman Sachs is actually bringing 22 percent and the recession to arrive by the end of the year.
It has been raising rates, of course, the new Tory leader says she'll bring economic relief through tax cuts, have a listen.
(BEGIN VIDEO CLIP)
LIZ TRUSS, BRITISH CONSERVATIVE PARTY LEADER: I will deliver a bold plan to cut taxes and grow our economy. I will deliver on the energy crisis dealing
with people's energy bills, but also dealing with the long-term issues we have on energy supply.
(END VIDEO CLIP)
SOARES: Bianca Nobilo joins me now for more. And Bianca, I mean, the next few weeks will define I think it's fair to say her premier show because her
entry is huge in terms of the tasks ahead, not just cost of living crisis, but of course war in Ukraine.
BIANCA NOBILO, CNN CORRESPONDENT: And she doesn't have much time not only other crises that she's facing urgent, but she's only got two years before
the absolute last date for another general election. That's not a lot of time to win over a population who by any estimation at the moment in the
polls, she is deeply unpopular with facing these myriad of huge, huge issues. And that the sense I get from speaking to the majority of people in
there or in the wider country is that it would take a politician of great caliber.
Somebody of historic significance to be able to weather these storms, build popularity and unite the party again and she just doesn't.
(CROSSTALK)
SOARES: Many people don't know her, right? Many people do not know her. Yes, she was foreign secretary. But many people do not know who Liz Truss
is.
NOBILO: No.
SOARES: What she's like, what she stands for. She was appealing, of course, during the hustings throughout the country. She was appealing to a sliver
really of the population. She got 57 percent -- point-four percent of the vote. So how does she have that have the -- how does she reached that
balance, Bianca, trying to appeal to the whole population but also pleasing those within her party?
NOBILO: This issue of the vote is very significant. And I'm sure for our viewers around the world. It's quite baffling that in one of the world's
oldest democracies, what ultimately turned out to be 0.2 percent of the eligible electorate in the United Kingdom have appointed this prime
minister. I mean, that is quite baffling notion.
SOARES: That is. Yes.
NOBILO: When I've spoken to people that know Liz Truss or have worked with her in the past, they say that she tends to play to the gallery that's in
front of her. So her objective over the last eight weeks was win over the conservative base who are more right wing. That's been well rehearsed
today. We understand that. Now it's her job to unite the Conservative Party which is broader and broader still to try and bring the country on board
with her plans.
So I'll be watching to see how much she changes her tone in these coming weeks and adjust her messaging to try and bring more people on board with
her.
[15:35:06]
SOARES: I mean, the job at hand is huge. We still see in terms out when she speaks outside 10 Downing Street, whether she provides more detail because
this is what we're hearing from people up and down the country. They want more do the -- once the plan really for the weeks and months ahead as of
course as we get into winter. Bianca, thank you very much indeed. Well, energy is one of Liz Truss's biggest challenges, of course, this viral
tweet from a Yorkshire restaurant owner highlights why James Allcock's annual electricity bills.
Forecast to rise from just under 3000 pounds this year, to more than -- get this, 22,000 pounds next year. Households are feeling it too. Energy prices
will be three times higher this winter than last. And then UPM will outline her energy policy this week. Well, earlier I spoke to Conservative M.P.
John Whittingdale who says the plan will need to provide relief for consumers as well as businesses. Have a listen.
(BEGIN VIDEO CLIP)
JOHN WHITTINGDALE, BRITISH CONSERVATIVE MP: What I hear is particularly from businesses who don't have a protection in the form of a cap, and
therefore are already seeing huge increases in their energy costs, which in many cases they cannot meet. And their businesses are not viable unless
they get help. So I think we will be -- will be looking to hear from the new chancellor and from Liz about how we're going to help not just
consumers, but businesses as well.
(END VIDEO CLIP)
SOARES: Well, Tina McKenzie, policy and advocacy chair Federation of Small Businesses joins me. Tina, great to have you on the show. First of all, how
pleased are you? Are you pleased that Liz Truss is going to be the next prime minister? And what does that mean for businesses up and down the
country?
TINA MCKENZIE, U.K. POLICY AND ADVOCACY CHAIR, FEDERATION OF SMALL BUSINESSES: Well, congratulations to Liz Truss. I was pleased that within
our campaign, she put small businesses the self employed, and enterprise at the center of the campaign. And that was good to hear. But I think now we
know the scale of the challenge that it's time instead of big, bold words, it's time for some bold moves, and some actions from her own government.
And we're really waiting with bated breath to hope that she delivers for business across the country.
SOARES: Just explain, Tina, just for our viewers right around the world, what you are hearing from businesses around the country, what kind of
challenges, how worried are they about of course, not just the price squeeze and what we have coming in the next few months as of course as it
gets colder?
MCKENZIE: Well, look, the thing about this energy crisis is that we have a cap in the U.K. Well, for most of the U.K., not for all of the U.K.s
(INAUDIBLE) Northern Ireland. But we have this cap that protects consumers. And what we don't have for the micro and small businesses is any sort of
protection. We know that larger businesses can hedge, can negotiate, they have much more negotiating power but for the small businesses around the
U.K., they're getting bills that are predicting 400 and 500 percent increases, and they just can't afford it.
And there has been no help so far those small businesses. And every day, we're hearing about small businesses closing around the U.K. We thought we
had 5.9 million, 400,000 of those flows in 2020. And we're hearing that this is even worse than 2020 and COVID. So we need the prime minister to
act quickly. And we need to act on a group of measures not just one around energy, but also on other series of measures so that we protect the
businesses that we protected through COVID. You know, we help them stay afloat. We don't want them to go underline.
SOARES: Yes. I was speaking to one M.P. earlier today, conservative M.P. who said, you know, when I asked him, what are your constituents selling in
terms of cost of living crisis? It's also businesses, small businesses who are very worried about what that means that they might have to actually
shut shop. So in terms of bold action, you're talking about what we hear from Liz Truss. What exactly do you want to see? What do businesses, Tina,
what do they want to see?
MCKENZIE: Well, for the smallest micro businesses, we're asking that the government put in place a fund that can be delivered through local
authorities, like (INAUDIBLE) to keep them going in the short term. But generally, we'd like to see some sort of help with energy across the piece,
look at something like an energy cap, or some sort of deal with the energy companies that protect the small businesses through this period.
And that may be some other structure that the government agrees, but we can't allow these businesses to be slapped with 400 and 500 percent
increases, they simply cannot pay. Now what that means for the rest of our society is that as these businesses go under, they account for six -- more
than 60 percent of jobs in the U.K. We can't afford in this situation, in this type of economy for U.K. companies to go under for unemployment to
start to spiral.
[15:40:03]
That will be even worse than what we're facing right now. And I think Liz Truss and her colleagues do understand that and therefore we're looking
forward to the measures that they're going to put in place. But they need to put them in place quickly in order that we protect everyone.
SOARES: But this is a thing it needs to be very -- it needs to be impactful, it needs to happen very soon. So how soon do you think then this
needs to be announced in order to start having effect with prices surging so much, more than some 20 percent as we head into October?
MCKENZIE: Well, if there was anything good out of COVID, what we saw was a government can react and can impact things pretty quickly.
SOARES: Yes.
MCKENZIE: So therefore, we know that the government has the ability to use the rates, the business rate scheme, in order to go out right away and help
businesses. So for example, they could increase the threshold of business rates to 25,000. That would take 200,000 small businesses out of rates
completely immediately across the U.K. That could be done within a matter of weeks.
A deal with the energy companies, again, could be done within a matter of weeks to cap and protect small businesses from these bills that they just
are not going to be able to pay. It's just not possible.
SOARES: I have a feeling, Tina, that you and I will be talking much more often in the next two weeks. Tina McKenzie live for us from -- in Belfast,
Northern Ireland. Really appreciate you taking the time to speak to us. Thanks, Tina.
MCKENZIE: Thank you.
SOARES: And that does it for tonight for QUEST MEANS BUSINESS. I'll be back at the top of the hours. We'll make of course a dash for the closing bell.
Up next, Connecting Africa.
(COMMERCIAL BREAK)
[15:59:19]
SOARES: Hello. I'm Isa Soares. It's the dash to the bell. U.S. markets are closed for the Labor Day holiday. Here's a look at some of the other major
stories right around the world. European markets ended Monday session on a mixed note. The FTSE 100 unmoved as you can see there by Liz Truss's
victory in the Tory leadership contest. It ended the day, she's up by six points, pretty flat indeed.
Frances CAC quarante dropped by just over one percent, 1.2 percent and Germany's DAX fell over two percent. Almost 2-1/4 percent. Investors
growing increasingly nervous over Europe's energy crisis, as of course Gazprom confirmed it would keep this Nord Stream pipeline closed until
sanctions on Russia were lifted.
[16:00:06]
European natural gas prices also spiked as we are seeing as a result of course following on from that. And that is your -- that's your dash for the
bell, of course. Thank you very much for your company. "THE LEAD" with Kaitlan Collins starts right now.
END
