Starmer’s Costly U-Turn, Astra's UK Listing Risk, Trump Bill Rebellion Brews
21:56 Share

Pay later and all major cards so you can focus on scaling up.

When it's time to get growing, there's one platform for all business. PayPal Open. Grow today at paypalopen.com. Loans subject to approval in available locations. So, have you heard the story about the prescription plan with savings automatically built in? It's where a family of any size can feel confident the cost of their medication won't hold them back.

Go to cmk.co.stories to learn how CVS Caremark helps members save just by being members. That's cmk.co.stories. For enterprise organizations, managing all your food needs is a tall order.

But with Easy Cater, you get a single workplace food vendor with the tools and resources to make it easy. Giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs. Streamlining billing and payment and simplifying reporting. Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast.

Bloomberg Audio Studios. Podcasts. Radio. News. This is the Bloomberg Daybreak Europe podcast. Good morning. It's Wednesday the 2nd of July. I'm Caroline Hepkett in London. And I'm Stephen Carroll in Brussels. Coming up today, Keir Starmer's welfare cuts climb down, leaves the UK government with a £5 billion budget black hole. Press

President Trump's $3.3 trillion tax and spending bill faces Republican resistance as it heads back to the House. Plus, a health warning shares in AstraZeneca rise after a report the CEO wants to move the pharma giant's listing to the United States.

Let's start with a roundup of our top stories. The British Prime Minister abandoned his flagship welfare overhaul 90 minutes before a key vote, an upload to his authority. Faced with a rebellion of his own MPs, Keir Starmer reversed controversial changes to disability benefits, erasing £5 billion in planned savings. His Work and Pensions Secretary Liz Kendall was asked after the U-turn if the party still had faith in its leader.

I think people are 100% behind a Prime Minister who secured the first Labour government in 14 years. There are definitely lessons to learn from this process. I certainly will do that and I'm sure my colleagues will too. Kendall Starmer and Chancellor Rachel Reeves are seen as the lightning rods for their party's anger. The gutting of the bill leaves the government hunting for billions in new revenue, making tax rises in the autumn even more likely.

President Trump's $3.3 trillion tax cut and spending bill is facing resistance from some House Republicans after it passed the Senate yesterday. Moderate and ultra-conservatives are pushing for changes to the bill, citing concerns over Medicaid cuts, spending reductions and the scale of the tax bill. House lawmakers are set to vote on the bill later today. House Speaker Mike Johnson can only afford to lose three Republican votes for the bill to pass.

and he seems all too aware of the uphill battle. We have members across the conference who have concerns about various provisions of the bills. A lot of people didn't get what they wanted. They didn't think some savings went as far as they should have gone or that maybe some of the cuts went too far. I mean, it depends upon who you ask. They have different opinions, but that's the beauty of a large deliberative body. Lots of different priorities and opinions and districts represented.

House Speaker Mike Johnson went on to say that he'll do everything possible to get the package passed by Thursday, President Trump's self-imposed deadline ahead of the July 4th holiday weekend.

President Trump says Israel has agreed to the terms of a 60-day ceasefire in Gaza, which will now be presented to Hamas. In a social media post, he said Israel had agreed to the necessary conditions for a truce and that Qatar and Egypt will deliver the final proposal. Trump also warned Hamas that things will only get worse if they don't accept the ceasefire. Bloomberg's Dan Williams says there is no sign that the militant group's position has changed.

It would appear its conditions remain firm. Those conditions are for a full Israeli withdrawal or actually, more precisely, an Israeli declaration that this war is over with a full withdrawal of troops and tanks from the Gaza Strip. Effectively, Hamas wants a guarantee that once it delivers all the hostages it still holds, some 50 people, then it will be effectively provided immunity from an Israeli offensive designed from the outset to topple it from power and to disarm it.

That's Bloomberg's Dan Williams. Donald Trump announced the development ahead of hosting Israel's Prime Minister Benjamin Netanyahu at the White House next week. The United States is halting the transfer of artillery rounds and air defences to Ukraine. It's a move that deprives the country of much-needed weapons.

as it endures more intensive missile and drone attacks from Russia. The White House says the decision came after a review of U.S. munitions stockpiles amid concerns they had fallen too low. The Pentagon says that it continues to provide President Trump with, quote, robust options to continue military aid to Ukraine.

It's being reported that AstraZeneca's CEO Pascal Sorio wants to move the drugmaker's stock listing to the United States. Bloomberg's Christopher Pitt has more on what could prove to be a major setback for the London Stock Exchange and the UK's efforts to build up its life sciences industry. According to reporting from The Times, Sorio is frustrated with the UK's regulatory regime for drugs and is concerned that the country's life sciences sector

is falling behind the US and China. Citing people familiar with the matter, the paper says the pharma CEO is also discussing relocating the firm's corporate listing to the US.

AstraZeneca is Britain's largest publicly traded company, with a market value of about £160 billion. Losing it would mark another sign of the UK's declining status as a magnet for global capital. A spokesperson for the company said we do not comment on speculation as AstraZeneca's share price rose following the report. In London, Chris Pitt, Bloomberg Radio.

Bank of England Governor Andrew Bailey says that high interest rates aren't working as well because of Britain's low debt levels. The Bank of England is taking a cautious approach to lowering UK interest rates as it tries to squeeze out stubborn price pressures in Britain. Bailey told a panel in Sintra that he has been surprised.

The level of household and corporate debt in the UK economy is actually lower than we would have expected it to be, but based on past experience. So again, that feeds through into just how restrictive policy is at a given interest rate. It's somewhat less restrictive probably than it would have been historically.

The central bank governor added that the unexpected low debt levels are one of the reasons that he doesn't try to forecast when the economy has reached a neutral point. Traders now put the odds of another interest rate cut at the Monetary Policy Committee's next meeting in August at over 80%, keeping the Bank of England on a once-a-quarter pace for interest rate reductions.

Santander has agreed to buy TSB from Sabadell for £2.65 billion in an all-cash transaction. The deal will make Santander the UK's third largest lender by personal current account balances and the fourth largest by mortgage value. The combined bank will have close to 28 million customers and Santander says it will lead to cost savings of at least £400 million.

And those are some of our top stories for you this morning. In terms of the markets, so Asian stocks are slightly flat at the moment. MSCI Asia Pacific Index is flat at least. President Trump saying that he'll stick to the July 9th deadline for imposing higher levies and again criticising Japan. So it's Japan's stocks that are weighing. Nikkei 225 down two tenths of one percent. The Kospi is also lower eight tenths of one percent. In the FX markets, the Euros had this huge winning streak, the best ever.

In 20 years now, at 14% versus the dollar year to date, we've seen a new high for 2025 yesterday of 118.29. At the moment, we trade at 117.94. And the Blue Bay Dollar Spot Index this morning is down again. So that's a look at the markets from the currency perspective. Just in terms of the stock futures, actually surging for U.S. stocks, 50 futures up by 0.6% Stephen.

Well, in a moment, we'll bring you more on the UK Prime Minister's climb down over his welfare reforms, plus the latest wrangling over Donald Trump's tax bill in the US. But another story that caught our eye this morning about what I'm going to call one of the most controversial corners of the internet. Of course, talking about the book reviews website Goodreads. It's owned by Amazon. If you don't know what I'm talking about, you've clearly never gotten into an argument about somebody who's dissed your favourite book online.

Jason Bailey's been writing about this for Bloomberg Opinion, and he talks about the importance of the platform, first of all, how it can drive sales, how it can be something that can be a huge word of mouth boost to authors. But also, as with many review websites, it has its problems in fighting within their communities as well. But also what he describes as Amazon's unwillingness to take responsibility for the reach of the site and from instituting common sense

guardrails. Take, for example, review bombing. This is a practice where a work gets bombarded with bad reviews, often because of a perceived ideological issue with the author rather than anything to do with the book itself. But then creates problems, obviously, because, you know, books essentially are being, getting bad reviews for nothing to do with the book at all. No, and look, we've seen

this so many times before. Why is this such an issue? I mean, we've seen it when it comes to restaurants. We've seen it, you know, for any tourist destination that you might go to, films and movies. There are loads of these aggregator sites and kind of keeping

control of the reviews and making sure that they're actually fair to the people who are producing the product is really, really important. So it's kind of odd that this has not happened also in the publishing world. So yeah, I think it's really interesting that Jason makes this point. I mean, he says that one solution may be the use of verification, although it's quite tricky because he says

at least you'd be able to verify that a user has actually bought that book, but then you'd be funneling people towards only Amazon and buying their books maybe. So perhaps that would be unfair. Anyway, so I thought it was a really good write-up. The internet needs a policeman for Goodreads is essentially what we've learned. But it's a great piece from Jason Bailey. You'll find it at blibber.com slash opinion. Now let's talk about what happened last night. The British Prime Minister Keir Starmer abandoned key parts of his flagship welfare reforms.

in order to avoid a defeat in Parliament, but at what cost to his authority and the nation's finances? Joining us now is our UK politics reporter, James Walcott. Good morning, James. Take us through actually what happened yesterday.

I think the way to think about it is, Caroline, on a piece of legislation the Labour leader has called a moral imperative that his government has said is key to resolving the 2.8 million people out of work in the UK. And just last week where he referred to rebels on this issue as a distraction and, quote, noises off.

he has had to, in a humiliating climb down, strip his own flagship reform of any measures that would save it any money. And that comes after crunch talks were held last week.

and a U-turn was held then, a sort of second, rarely seen double U-turn, further taking money out of the policy. And one final sting in the tail, these cuts were already budgeted into the government's spending plans for this past summer. And so now that leaves the government facing roughly £5 billion as a fiscal black hole, something that they have attacked previous governments for doing.

And how weakened, James, is the Prime Minister by all of this? Well, objectively, Stephen, he still has the largest majority since 2001, and he's not going anywhere for the next four years, at the very least the Labour government isn't. But I

But I think you can look at it in two ways in which, yes, they really set him back as a leader. One is the Labour Party mood. MPs are furious at how this has been handled. They are furious at Starmer himself. They are furious at the Number 10 operation.

there is, I think, growing anger around what they see as kind of the fiscal way decisions were done. A lot of the debate yesterday in Parliament was talk about how the welfare reforms were not done for the sake of getting people back into work, MPs argued, but instead sort of to balance the books. And the MPs felt that was morally objectionable. That's what led a lot of the anger in response to this. But the other way is fiscally, this now shows that this is a government that really struggles to make cuts to the savings bills. So you look at

winter fuel which the u-turn recently on you look at this u-turn any kind of government savings spending reductions is clearly quite a difficult ask of this labour government that then puts them on the road to taxes in the autumn budget and yet of course all of this was was well flagged at the last general election that there were going to be very many difficult decisions to be made where do you think this leaves the chancellor

I think politically in a lot of trouble. It was fascinating that so many MPs pointed to the chancellor as a key problem in how this government was being run more for kind of the fiscal situation than for Labour's political aims, but also fiscally in equally a lot of trouble in that she has ruled out debt rule changes. These spending commitments were supposed to be the way the government would spend money. They are now effectively junked.

And that leaves her with one road, which is taxes. She has ruled out in the past taxes on working people. Taxes on business seem remarkably restrictive, given that's what she did last year. Something we'll have to give here. And the question is quite exactly what?

Okay. James Wilcock, our UK politics reporter. Thank you. Pay later and all major cards so you can focus on scaling up.

When it's time to get growing, there's one platform for all business. PayPal Open. Grow today at paypalopen.com. Loans subject to approval in available locations. So, have you heard the story about the prescription plan with savings automatically built in? It's where a family of any size can feel confident the cost of their medication won't hold them back.

Go to cmk.co.stories to learn how CVS Caremark helps members save just by being members. That's cmk.co.stories. For enterprise organizations, managing all your food needs is a tall order.

But with Easy Cater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting.

EasyCater, your business tool for food. To learn more, visit EasyCater.com slash podcast. Now, meanwhile, in the U.S., of course, President Trump's tax and spending bill passed the House with J.D. Vance's tie-breaking vote. But it is being challenged in the House by moderate and ultra-conservative Republican lawmakers, so different.

sides of the Republican Party. Joining us now to discuss is Bloomberg's News Desk editor, Jill Desis. Good morning, Jill. I think firstly, we should start by what's actually in this enormous Senate bill, which really does comprise President Trump's entire domestic legislative agenda.

Yes. Good morning, Caroline. It really is. I mean, you know, he describes it as the big, beautiful bill. This thing sure does seem like it has pretty much everything in it. So what we're looking at with the Senate version is, first of all, they've altered that earlier House approved version. It's now going to make deeper cuts to safety net programs such as Medicaid health insurance for the poor and disabled. The Senate bill also speeds up the elimination of clean energy tax

You are seeing some benefits for businesses from some changes from the Senate version that makes permanent a series of breaks that had only been offered temporarily. So that's a pretty big component of this. And then there's also a more generous tax break for companies based in high-tax states.

And along with this, you're also seeing the extension of some tax cuts for businesses and people initially passed in 2017 when Trump was first in office. That was due to expire this year. So that's going to be extended according to this new version of the bill, adding in some temporary new breaks for tipped in overtime work.

workers, the elderly, car buyers who take out loans. There's also a bunch of funding, hundreds of billions of dollars worth of funding in defense spending, and then also for Trump's immigration crackdown, which has really been a signature of Trump 2.0, his second term in office. So yes, I mean, really kind of encompassing everything here in the Senate version of this bill.

So what about going back to the House then? What sorts of objections could be coming from Republicans there as this version goes back to them? Yes. So, Stephen, I think as Caroline hinted just a couple of minutes ago, you're probably going to see some objections that run the gamut, everything from ultra conservatives who are worried that in some ways this bill doesn't go far enough, as well as more moderates that are also worried that it does.

Some of the changes are too much. So some of the holdouts that you're seeing from the GOP in the House are that, you know, the few really more on that moderate side, they're kind of troubled by the scale of the Medicaid cuts in particular. And then again, on that ultra conservative side, you're seeing some that, you know, say that they really were kind of strong armed into passing the initial version of this bill when it first went through the House. And they really want to see some deeper spending cuts.

So what we're hearing right now from Republican leadership in the House is that they're fairly confident or that they're very confident that the bill is going to pass when it comes back to the House. But again, I do feel like in some ways we're back to where we were when the House was originally debating this, where you've got people on either end of the spectrum that really kind of want what ultimately come down to competing interests.

to make their way into the bill. And so it really may come down to a case of, you know, how do you manage to get enough people over the line where you can actually get this through? Because remember, that first version of the House bill, when it originally passed back in May, it was a one vote margin. Yeah. In terms of what this means then for the U.S. fiscal position, I mean, and just a moment ago, Jill, I do want to

draw this comparison. You know, this bill, for example, has cuts to Medicaid of $1 trillion over 10 years. Here in the UK, you know, you're talking about £5 billion. I mean, the scale of this bill is just staggering. But what does that therefore mean for the US fiscal position and how it's being responded to and reacting to this in the markets? Yeah.

Yes. Thanks for pulling out that number, Caroline. Again, really does just emphasize how really, I mean, just enormous the impact of this is. You know, we're looking at some of the Bloomberg Economics is looking at, you know, some calculations. They're expecting the U.S. debt to GDP ratio to near 100%.

26% by 2034, looking at how exactly this bill would impact here. I mean, that really does call into question the sustainability of U.S. fiscal policy. I do think what's really important to remember, particularly as you're looking for market reaction, I think we'll have to see how this bill ultimately unfolds in the House. I know that ultimately, Treasury markets are certainly, I think, a bit wary of this. There's some doubt about whether that

rally is ultimately going to continue depending on the fate of this bill. But to me, you know, the big question is, all right, so you've, you know, assuming this bill actually passes and you do see, you know, the debt in the U.S. affected that way, one potential way to offset this is ultimately was supposed to come down to tariffs, right? And there's still a lot of uncertainty over what Donald Trump's trade policy looks like going forward. We've got that deadline coming up.

you know, on the 9th, is that ultimately going to, you know, are we going to see, you know, more sustainable like tariff policy to actually offset some of the impact from this bill? We're hearing right now from Republican leadership in the House is that they're fairly confident or that they're very confident that the bill is going to pass when it comes back to the House. But again, I do feel like in some ways,

we're back to where we were when the House was originally debating this, where you've got people on either end of the spectrum that really kind of want what ultimately come down to competing interests to make their way into the bill. And so it really may come down to a case of, you know, how do you manage to get enough people over the line where you can actually get this through? Because remember, that first version of the House bill, when it originally passed back in May, it was a one vote margin. Hmm.

Yeah. In terms of what this means then for the US fiscal position, I mean, and just a moment ago, Jill, I do want to

draw this this comparison you know this bill for example has cuts to medicaid of one trillion dollars over 10 years here in the uk you know you're talking about um five billion pounds i mean the scale of this bill is just staggering but what does that therefore mean for the u.s fiscal position and how it's being responded to and reacting to this in the markets it's

Yes. Thanks for pulling out that number, Caroline. Again, really does just emphasize how really, I mean, just enormous the impact of this is. You know, we're looking at some of the Bloomberg Economics is looking at, you know, some calculations. They're expecting the U.S. debt to GDP ratio to near 102.

26% by 2034, looking at how exactly this bill would impact here. I mean, that really does call into question the sustainability of U.S. fiscal policy. I do think what's really important to remember, particularly as you're looking for market reaction, I think we'll have to see how this bill ultimately unfolds in the House. I know that ultimately, Treasury markets are certainly, I think, a bit wary of this. There's some doubt about whether that

rally is ultimately going to continue depending on the fate of this bill. But to me, you know, the big question is, all right, so you've, you know, assuming this bill actually passes and you do see, you know, the debt in the U.S. affected that way, one potential way to offset this is ultimately was supposed to come down to tariffs, right? And there's still a lot of uncertainty over what Donald Trump's trade policy looks like going forward. We've got that deadline coming up.

you know, on the 9th, is that ultimately going to, you know, are we going to see, you know, more sustainable like tariff policy to actually offset some of the impact from this bill?

This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130 online.

I'm Caroline Hepke. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak Europe. Pay later and all major cards so you can focus on scaling up.

When it's time to get growing, there's one platform for all business. PayPal Open. Grow today at paypalopen.com. Loans subject to approval in available locations. Is your business struggling to balance your workforce with production demands? In a variable economy, balancing your spending while maintaining the necessary team is tricky.

Specialized Recruiting Group provides professional contractors to flex up for peak season without having to raise your core workforce headcount. Go to srgpros.com right now to get access to the expert contractors you need. Try a better way to manage your workforce with Specialized Recruiting Group.

Let's talk photos, not just storing them, showcasing them. You've got images that matter. Whether you're a photographer, a business updating your followers, or just someone who wants to share life's moments the right way. So why hand them over to Big Tech's one-size-fits-all cloud? Big Tech companies are the fast food of photo sharing. Quick, easy, but not exactly gourmet. And what about your data integrity? Jalbum.net is the photo sharing solution that puts you in control. Want

Want to host images on your own server? You can. Want a layout that actually reflects your brand or style? JAlbum's customizability is unmatched. And if you're a business sharing regular photo updates with your audience, this tool was built with you in mind. But don't just take our word for it.

This is an iHeart Podcast.