Bloomberg Audio Studios podcasts radio

news.

This is the Bloomberg day podcast. Good

morning. It's Wednesday the 22nd of

July. I'm Caroline Hepka in London

>> and I'm Steven Carroll in Brussels.

Coming up today, America's Gulf allies

become exasperated as the Iran war

escalates across the region. Bond

markets give Andy Bernham a bruising

welcome as the prospect of nationalized

UK public services puts creditors on

notice. Plus, out in the cold, the

European Union threatens action as

Finland's youth pay the price for years

of weak growth and spiraling debts.

>> Let's start with a roundup of our top

stories.

>> The widening conflict between the United

States and Iran is leaving America's

Gulf Arab allies increasingly anxious

about the threat to their security and

economies. Sources tell us that

officials in the region are now divided

over how President Donald Trump should

proceed. Some are urging tougher

military action, while others want an

immediate return to diplomacy. The

growing split comes as Trump sought to

play down prospects of immediate talks

with Iran.

>> They want to meet desperately to try and

end it because they're getting

decimated. Uh I will tell you, they want

to desperately meet and until they're

ready to meet in a meaningful way, we

have no interest. Despite Trump's

comments, mediators are continuing

efforts to restart negotiations as

Houthy militants in Yemen threatened

shipping in the Red Sea, helping to push

Brent crude oil higher for a fourth

straight day. In Washington, Defense

Secretary Pete Hgsth asked lawmakers for

another $87 billion to replenish

Pentagon stocks depleted by the war with

Iran. During a Senate Appropriations

Committee hearing, Democrat Dick Durban

asked HEGF how much the conflict has

cost so far. Do you have a new estimate

about what the war has cost us so far in

this the fifth month of the first year

of this war in Iran? Uh

>> Senator, the estimate we have as of

today is 37.5 billion.

>> Hex has faced criticism from a number of

Democrats at the hearing over the

growing costs of the unpopular conflict

that is now once again raising energy

prices in the United States.

UK Prime Minister Andy Bernham has

approved the continued use of British

military bases for what the government

here describes as defensive US strikes

against Iran. The decision maintains the

policy of his predecessor K star

allowing American aircraft to operate

from sites including Diego Garcia and

RAF Fairford. And as Britain seeks to

avoid an immediate rift with Washington,

the new defense secretary where

streeting has signaled the government is

preparing to accelerate defense spending

and invest more in Britain's domestic

defense industry.

>> My focus is on maximizing our deterrence

and ensuring that should deterrence

fail, we're ready to fight and win

alongside allies. That means

reindustrialization and building back up

our production capacity so we can give

our armed forces the kit they need as

well as building and buying British so

that we deliver good jobs in communities

in every part of our country.

>> West treating added that the prime

minister's commitment to national

defense would become even clearer in the

coming months fueling expectations that

military spending could rise to 3% of

GDP by 2030. UK government borrowing

costs are lingering around two-month

highs as oil prices and fiscal jitters

keep the markets on edge. Both Britain's

new prime minister and its new

chancellor are stressing their

commitments to fiscal discipline. Here

is Chancellor John Healey speaking to

Treasury staff yesterday. I'm still

burning with a passion about this

institution as a force for stability,

for security, for growth, a force for a

successful Britain. But despite Healey's

words, some in the bond markets wonder

how the new administration intends to

fund some of its big pledges. This

morning, the government has announced

it's lowering the national cap on all

bus fairs in England outside London from

three pounds to two pounds. To the

latest earnings now, Spanish lender

Santander has reported profits that beat

estimates in the second quarter of just

over3.5 billion. Net interest income at

the bank also came in ahead of

expectations at almost 11.7 billion.

Santandere says that it's on track to

meet its 2026 targets. We're also uh

looking at the profit beat from

Norwegian energy company Ecued

adjusted operating income after tax of

$3.44 billion for the 3 months to the

end of June. The oil and gas firm and

the industry uh at large have been

lifted in recent months by higher crude

oil prices. Ukraine's Vladimir Zalinski

has dismissed one of his top commanders

after nationwide protests calling for

his removal. Alexander Sirski, the

commander-in-chief of the armed forces,

will be replaced by the more

reform-minded Myo Draatai. Here's

Zilinski speaking through a translator.

>> Alexander Syski.

>> Alexander Syski delivered results for

Ukraine in the defense of Keev, the

Kkefe offensive, and the Kursk

operation. We have come a long way.

Ukraine's defense continues and every

warrior must be treated with dignity.

>> By removing Sirki, Zilinski yielded to a

key demand expressed by thousands of

Ukrainians who took to the streets on

Thursday in cities across the country.

The rallies were triggered by Zilinski's

ouster last week of Defense Minister

Mail Federov, who'd been locked in a

power struggle with the military chief.

China's car brands took more than a

third of hybrid EV sales in Europe last

month as companies try to get ahead of

potential tariffs. Data from analysts

data force show firms like BYD are

ramping up sales on the continent,

taking 34% of market share. It's the

latest in a trend of Chinese exports

ramping up to Europe, including an

unlikely food. Bloomberg's James Wilco

has more. Duck is on the menu at the EU

anti-dumping department. As governments

around the world ponder what might be

the next so-called China shock,

agriculture is emerging alongside green

tech as a key fault line. China's global

trade heft and shrinking population mean

food production is rising, but local

demand can't keep up. Take duck meat.

Overseas sales in the first 5 months of

this year are near the entirety of

2025's exports. That's got Brussels'

attention. And although the duck market

is a niche one, it could be a sign of

more accusations of foul play to come.

In London, James Walcock, Bloomberg

Radio. OpenAI says two of its most

advanced models escaped a controlled

testing environment and hacked into

another artificial intelligence company

in what the Chachi GPT maker describes

as an unprecedented cyber incident. The

models breached the systems of AI

developer Hugging Face during internal

safety testing. The disclosure is likely

to accelerate concerns over the ability

of advanced AI models to carry out cyber

attacks as lawmakers demand mandatory

safety safety testing and the disclosure

of security incidents. Meanwhile, France

has passed legislation to restrict the

use of social media for children under

15 years of age. It's the first major

European country to do so in a move that

may strain relations with US tech firms

and President Trump. According to the

text, under 15s won't be able to create

new accounts from September before a

full ban comes into effect in January

for all existing profiles in France.

Meta's platforms as well as Elon Musk's

X, Google's YouTube, and China's Tik Tok

will likely be the most affected. So,

those are a few of our top stories for

you this morning. Let's look at the

markets where Asian stocks are climbing,

held by rebound in chipmakers. MCEI

Asia-Pacific index this morning is up by

half of 1% this after Tuesday's biggest

one-day gain in a month. The Cosby is up

by more than 4%. European stock futures

nudging higher barely about a tenth of

1% higher this morning. Brain crude is

uh back to gains with real pessimism

about what is happening in the Middle

East. Braided futures at $9226 are up by

1.4%.

Gold also at 1.2% the highest level in

two years. Treasury hold treasuries uh

holding on to Tuesday's losses. You've

got 10 and 30-year yields at around the

highest levels in about 2 months. So

those are the markets.

>> In a moment, we'll bring you details of

a key decision facing Andy Burnham over

the future of Temp's Water. Plus, the

debate in Finland over how to fix its

public finances. But another story that

caught our eye this morning after that

news we just brought you around open AI

and what its models have been up to.

What about job hunting in the age of AI?

Our latest Bloomberg opinion newsletter

ties together some of the recent work

from our columnists including the rise

of backdoor references where employers

are contacting current and former

colleagues who haven't been vetted by

applicants. Steven Mims has been writing

about this. He says this used to be

confined to highle jobs. It's now being

used for entry-level jobs as well. And

apparently it's AI motivating employers

to do this more. They're concerned that

applicants are using AI to polish their

CVs and coach them through job

interviews. So they want essentially

personal views on how good this person

or well suited this person might be uh

for a job. It's a a crisis of confidence

in hiring although not it has to be said

an entirely new practice. I think this

has probably been going on for a while

>> really. I mean gosh this is like 360

degree feedback um you know on

hyperdrive. I mean does it give you an

unvarnished view to ask sort of former

colleagues maybe who aren't prepared for

that phone call or does it mean you end

up with kind of gossip about people? I

don't know, that's a little bit tricky.

>> It's a different kind of bias, right?

Like, do you trust the AI more? Do you

trust more of the people you're going to

to phone and call? Obviously, a personal

connection is great, but what if, you

know, you're phoning someone that maybe

they'd had a falling out, they'd used

their mug in the kitchen one time, and,

you know, as a result, they never really

forgiven them even though they were very

good at their job. All sorts of things

can come up in these conversations.

>> Yeah, absolutely. Um, but it does show,

you know, how difficult it is in terms

of of hiring. Um I mean here in the UK

actually I think what's really

interesting is that the official data

shows how many more temporary staff are

being used. There's quite a switch

because of so much uncertainty towards

temp staff rather than permanent uh

recruitment. So yeah I think that's the

bigger picture.

>> Yeah really interesting selection of

reading around that. We'll put a link to

the Bloomberg opinion newsletter in our

podcast show notes.

Well let's turn back to the UK now. One

of the items high on the agenda for the

new prime minister is what to do about

temp's water. Its creditors are trying

to avoid the troubled utility being

taken into public ownership. Our

reporter Jess Shankerman joins us now

for more. Jess, you've been following

the issues of Tens Water for years.

We've talked about them many times, but

just remind us what state the utilities

finances are in right now.

>> So, Tens is mostly debt. It shareholders

walked away from the business more than

two years ago now, declaring it

uninvestable.

and last year it had to draw down, raise

another emergency loan. So it's it's

around 18 to19 million of debt at the

moment and it's gearing the the debt to

equity ratio is is 86%. So it's just

it's just mainly debt.

>> Yes. I mean, troubled is just the

beginning really of the description for

this utility that does have 16 million

customers in the UK and there's just

been a hose pipe ban announced for 10

million of them. What are the creditors

offering this new government? You know,

is there any possibility of turning over

a new leaf?

>> Yeah. So, the creditors have been in

talks with the regulator. They're called

offwa. Critics has been in talks with

them for for a few months and they're

trying to agree a rescue deal which

would see them actually take ownership

of T's water. Last year KKR was looking

at becoming the major shareholder of

Tame's. They walked away after um

negotiations with the government fell

through

last month. The then Secretary of State,

we've got a new environment secretary

now, Angela Eagle. But Emma Reynolds,

who was the Secretary of State, stood up

in parliament publicly said that she did

not think that deal was good for

consumers or the environment, which we

understand blindsided the creditors who

thought that the negotiations were were

going going quite well off what is

waiting to hear what the new

administration

thinks about the future of Temp's Water

before making any decision. Yesterday,

the creditors kind of jumped the gun a

bit, tried to put their stall in and

said they would offer the government a

golden share in temp's water if they did

not put it into special administration

to because Andy Burnham has said that he

wants more public control over

utilities. So they're saying okay well

rather than uh fully nationalize the

company how about you have a seat on the

board and you have more say in in all

the decisions that are taken.

>> So I suppose what what are the options

open to Andy Burnernham then kind of

given the difficulties the temp's water

has and and the indications that we have

about what we might do. So the immediate

question is whether to put temps into

special admin administration which is a

form of temporary nationalization and

the previous governments have held off

from doing that because

you you really need to have a watertight

case to make to the courts that they're

that they can go into SAR and their

concern is it that if they apply to the

courts for SAR and fail you they then

put TMS into administration by default

in the process of doing that and open

themselves up to legal challenges.

Um Andy Burnham we understand wants to

take that step and we have been

expecting an announcement this week

although it hasn't come yet. Uh then

there are larger questions about what

happens to Temp's water in that process.

So would it be sold on to another

private investor following SAR? We

understand that he's also really

interested in a in a mutualization

proposal

>> which would see it become a nonprofit

and and have that kind of greater public

control. We're kind of waiting to hear

what what the long-term options could

be. There's also also implications on

this I think for Southeast Water which

is a much much smaller company but

locally within the UK they've had

they've been in the news a lot. They've

been they've had a number of outages

that people living in in Kent in

Tumbridge, Wales have had no water for

weeks for part of of this year and last

year, which is it's you know, it's one

thing to be in debt, but for people to

not even have access to water, that's

that's really serious.

>> Yeah, absolutely. And it and it um also,

as you say, and I know you Jessie

reported on this um in depth, it also

still leaves the question of investment.

you know there still has to be

investment in terms of the water

infrastructure in in the UK doesn't it

so it's a really very significant issue

thank you for bringing it to us and just

giving us the latest on what this new

government in the UK might do still a

lot of anticipation around it isn't it

around what happens with temp's water

that's our reporter Jess shankman thank

you stay with us more from Bloomberg

daybake cur coming up after this

>> well Finland is facing difficult choices

over its public finances. The country's

economy has barely grown since the

financial crisis, and it's been running

budget deficits for 17 years. Now, the

EU has set a deadline to rein in

spending. Our Nordic's managing editor,

Katy Pipalo, joins us now for more.

Katy, how bad is the economic situation

in Finland and what's the cause of it?

>> Well, it is actually really bad. Like

you say, the economy hasn't truly seen

growth in more than a decade. Um the

unemployment rate is now at the highest

in the European Union at more than 10%.

And actually 1 in four young people are

without a job at the moment. But the

it's not just like an instant economic

crisis. It has far longer roots. The

workforce has been shrinking since about

2010 and the country hasn't made up for

it with immigration. So you're getting

less input from workers into the

economy. And in previous sort of

downturns, domestic consumption always

sort of held up um and supported the

economy. But since the pandemic, we've

seen um the energy crisis winter of 2022

23. Um we saw um rate hikes from the

European Central Bank. Those really hit

consumer wallets um in Finland and that

hasn't really bounced back yet. And

underlying all of this, there's

structural change as well in the

economy. So, you'll remember Nokia

making those indestructible mobile

phones. It was Europe's biggest company

in around 2000. Um, when people actually

started using iPhones and iPads, that

erased a big leg off like Finland's

economy, these Nokia mobile phones. But

it also took another leg, which was

paper making. Um, at that time it was

about 20% of Finland's exports. And when

people no longer read newspapers, um,

that really hurt the country. And so

that's all led to massive deterioration

in public finances.

>> Wow. Okay. So the situation very very

difficult. Well, the EU has told

Helsinki that it needs to fix the public

finances by 2028. So what measures are

actually being discussed? How are they

going to do that?

>> Um really all budget lines are at risk

here. Um except maybe defense since

Finland sits right next to Russia. Um

but we've already seen cuts to welfare

benefits. Um we've seen deep cuts u to

health care. There's, you know,

emergency rooms in in uh rural areas

have closed, you know, causing people to

have to drive long distances to get

health care. Um we've seen cuts to

housing benefits which have pushed a lot

of people to try and find cheaper

accommodation. Um and at the same time,

the government's really sort of tried to

kickstart economic growth, but that's

really hard when you're cutting

spending. is actually leads to the

spiral uh downward um and makes the job

even harder.

>> What about the the political debate over

all of this Katy? Because of course some

of these budget cuts are painful and and

striking at things that people hold very

dear uh voters everywhere and in Finland

in particular in some of these cases.

What does that mean for the politicians

having to make these decisions?

>> Well, yeah, the cuts are deeply deeply

unpopular here. Uh we are going into a

general election in April 2027 and the

main parties in the four member

coalition are really trailing the

opposition in the polls. So they're once

again sort of proving the old adage that

that policy makers know what to do but

they don't know how to get elected after

they've done it. Um it really looks like

uh the opposition social democrats will

take power in the April vote.

Thanks for listening to Bloomberg

Daybreak Europe.

>> If you're enjoying the podcast, give us

a follow, leave a rating or review, and

maybe send it to that one friend or

colleague who's always trying to keep up

with the news.

>> And if one podcast a day isn't enough

for you, you can also listen to us live

every weekday from 6:00 a.m. in London

on DAB Radio, on TuneIn, and on the

Bloomberg Business App.

>> Or if you've got a smart speaker nearby,

just say, "Play Bloomberg Radio.