France Averts Shutdown, US Sanctions EU Tech Lawmaker, Brevan Howard's Exit

Your morning briefing, the business news you need in just 15 minutes.

On today's podcast:
(1) The French National Assembly approved a stopgap budget law for 2026 to keep the state running into January after lawmakers failed to reach an agreement on the full fiscal plan.

(2) The Trump administration on Tuesday imposed visa sanctions on former European Union Commissioner Thierry Breton and four other people for trying to make American tech companies police political speech on their platforms.

(3) Gold rose to an all-time high above $4,500 an ounce on escalating tensions in Venezuela and expectations for more US rate cuts. Silver and platinum also advanced to records.

(4) The Justice Department’s long-awaited rollout of the Jeffrey Epstein files has been a chaotic spectacle that, so far, has largely turned the spotlight back to his previously known associates, including President Donald Trump and former President Bill Clinton, while fueling frustrations.

(5) Alan Howard, co-founder of Brevan Howard Asset Management, joined the ranks of wealthy individuals exiting the UK amid tax hikes, surfacing as a resident of Switzerland.

Podcast Conversation: Five Top Tables: Where to Eat in Edinburgh for Business, Value

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:09):
This is the Bloomberg daybec podcast. Good morning, It's Wednesday,
the twenty fourth of December. I'm Caroline Hepga in London.
Coming up today. France passes a stopgap bill to keep
the state running. Debate on the budget resumes in January.
The US sanction's former EU officials in an escalating clash
over free speech and big tech, and the co founder

(00:32):
of Brevan Howard, billionaire Alan Howard has left the UK
to live in Switzerland. Let's start with a roundup of
our top stories. France has adopted a stopgap budget bill
for twenty twenty six to avoid a government shutdown. The
so called spiciale or special law, allows the state to
continue collecting taxes and borrowing money despite the lack of

(00:55):
a full budget. Effectively, it rolls over fiscal plans into
the new year. Addressing the Nation or French television, Prime
Minister Sebastia Locornu explained the situation.

Speaker 1 (01:08):
Taking the time to discuss a budget in a democracy
like France is not a weakness. In the meantime, a
special law is being discussed in parliament. It will allow
us to continue to collect taxes and keep public services
going from January first. That doesn't mean it's a budget
and there will be a number of negative consequences if
the situation continues.

Speaker 2 (01:30):
That was the French Prime Minister Sebastia Lecornu speaking Vira
translator ahead of the National Assembly's decision. The temporary legislation
comes after the government warned that the parts of the
finance bill that had been agreed so far would only
bring down France's deficit to five point three percent of
economic output in twenty twenty six, so lowering it a

(01:51):
tenth of one percent versus this year. The National Assembly
is set to assume debate on the full French budget
in early January. Now, the Trump administration has imposed visa
sanctions on former EU Commissioner Tierre Breton as a punishment
for his work regulating big tech. The US Sector of

(02:11):
State Marco Rubio announced the move on social media, accusing
Briton of extra territorial censorship.

Speaker 3 (02:19):
The US State.

Speaker 2 (02:19):
Department is also targeted for other people leading organizations that
are focused on digital hate speech encountering extremism. The Global
Disinformation Index, in a statement, called the US sanctions an
authoritarian attack on free speech and an egregious act of
government censorship. In a social media post, Breha, who was

(02:41):
also the former CEO of Orange and Atos, responded by
asking whether the US is returning to McCarthyism of the
nineteen fifties. Now gold has risen above four thousand, five
hundred dollars and ounce for the first time, while silver
and platinum also advances to two records. Precious metals are

(03:02):
ending this year with gains not seen in decades. Blueberg's
Metals reporter Martin Richie says global uncertainty has helped to
drive the rally.

Speaker 4 (03:13):
You know, you can never imagine prices at this level
even two years ago, but here we are. And I
think this December rally that you've seen in gold and
in the precious metals is really king a continuation of
the same themes we've seen throughout this year. It's about
the debasement trade, growing sort of mistrust in traditional assets

(03:35):
a sovereign bonds and currencies. It's a bit the weaker dollar.
It's about central banks buying gold because of those things.

Speaker 2 (03:43):
Richie adds that traders are now betting the US Federal
Reserve will lower the cost of borrowing again next year,
which would be a tailwind for non yielding precious metals.
Gold spot price this morning four four hundred and eighty
four dollars flat. Currently, the US economy expanded at the
fastest pace in two years. According to data release on Tuesday,

(04:06):
a real GDP increased at a four point three percent
annualized pace in the third quarter. Economists had expected growth
of just three point three percent. The surprise has pushed
up treasury yields as traders factor in the resilient consumer spending.
The data had been delayed due to the US government shutdown. Now,

(04:26):
BP has agreed to sell a majority stake in its
Castro unit to the investment firm Stone Peak Partners. Under
the deal, BP will get about six billion dollars for
a sixty five percent stake in the lubricants business. The
all major had planned to divest twenty billion dollars of
assets by the end of twenty twenty seven to improve
its balance sheet. It comes as Meg O'Neal prepares to

(04:48):
take the helm of BP in April after running Australia's
Woodside Energy. One of the co founders of Brevan Howard
Asset Management has left the UK, adding to concern about
the exodus of Britain's wealthy. Alan Howard has a net
worth of roughly four point three billion dollars and, according
to a Bloomberg analysis of regulatory filings, now lives in Switzerland.

(05:13):
Bloomberg's James Walcock has more.

Speaker 5 (05:16):
This year, Switzerland voted to reject a fifty percent inheritance tax,
while Britain expanded its version of the levy. Alan Howard
may have followed the incentives. The Brevan Howard co founder
declined to comment to Bloomberg for the story, but the
billionaire now joins the ranks of many of the financial elite.
We have reported on Leaving the UK that exodus is

(05:38):
a worrying trend for the government as it is banking
on higher tax revenue and growth from the wealthy for
its economic agenda in London.

Speaker 6 (05:47):
James Walcock, Bloomberg Radio.

Speaker 2 (05:49):
The release of the so called EBSTCEN files has so
far failed to satisfy the US public. The US Department
of Justice has released thousands of pages of heavily redacted
records and photos related to the convicted sex offender in
the past week, but the document dump has drawn criticism
for missing a December nineteenth deadline and for the heavy redactions.

(06:11):
President Trump says the saga is unfairly tarnishing individuals.

Speaker 7 (06:16):
A lot of people are very angry that pictures are
being released of other people that really had nothing to
do with Epstein, but they're a picture with him because
he was at a party, and you ruin a reputation
of somebody.

Speaker 6 (06:26):
But I never went there, but a lot of people did.

Speaker 2 (06:28):
Go there, President Trump speaking, They're doing a news conference
last night. Included in the late dispatch of release fars
As an email sent from an individual named AA saying
they are at the British War Family's Balmoral residents and
asking Epstein associate Gilaine Maxwell for quote inappropriate friends. In October,

(06:49):
Andrew Mountbatten Windsor, formerly a Prince and the Duke of York,
lost his titles following scrutiny over his links with Epstein.
Those are some of our top news stories today. Let's
look at the markets. So it's a shorter trading day.
Fewer markets are open across at Europe, but London is
trading forty one hundred is down two tenths of one percent.

(07:12):
The US socks at six hundred overall just about in
positive territory. US DOOP futures, though fading down a tenth
of one percent, very light trading volumes at the end
of what has been a really stelly year for US
and European stocks. Third year of US SOOX six hundred
gains up sixteen percent over all, so global stocks climbing

(07:33):
to a record high at the end of this year.
Ten year treasury yields have been consolidating around four sixteen,
so UK yields at four point fifty two. As for
those precious metal prices, gold four thousand, four hundred and
eighty six dollars, Bitcoin is down a percent and breakthrough
at sixty two dollars forty five. So that's a look

(07:55):
at the markets. In a moment, we'll get into the
story about France's budget and what to expect from central
banks next year and other stories caught my eye. Though
today I wonder whether you'll read this five top tables.
It's a column from Bloomberg Pursuits. And we may not
have even eaten pigs in blankets yet for Christmas in

(08:16):
the UK, but already there are lots of ideas about
how you can eat well in the city that prides
itself on doing hogmanat that is New Ye's Eve to you,
and I really like nowhere else is Edinburgh, of course,
and among the lists that the team have compiled, I'll
mention a few Cafe Carlton Dults in Leith and makers

(08:37):
Mash in the Old Town.

Speaker 3 (08:39):
In Edinburgh.

Speaker 2 (08:40):
The food scene, especially in the Port of Leath near Edinburgh,
is really growing because of quality seafood availability, our own
spoil the rest of what is revealed about the best
places to eat in Edinburgh. But perhaps if you're headed
to the raw Marles sometime soon, maybe you'll take a look,
maybe perhaps for a New Year's Eve.

Speaker 3 (08:59):
Care who knows. But let's think about what's happening in France.

Speaker 2 (09:03):
First, the National Assembly voted on this special law on Tuesday,
so this is to roll over the twenty twenty five budgets.
President Macro's putting pressure on Prome Minister Saci Corney to
have a budget by the end of January. Joining us now,
it's Blimberg's economist Jehan dalbar Jean. Thank you so much
for speaking to us today in terms of this emergency law.

(09:26):
So you know, the last bit of decision making by
lawmakers what does it actually do.

Speaker 8 (09:32):
So, yes, a special is basically a temporary, narrow version
of the budget, not to have a kind of U
style government shutdown in France. Basically, a special let allows
the public administration to run basic operational expenditures and to
borrow in the market, which is quite important.

Speaker 6 (09:51):
Altho, it's quite complicated to be.

Speaker 8 (09:54):
Very precise on its cop but just because it's the
third time in a French history such a specialot is
actually implemented, so it's.

Speaker 6 (10:02):
Quite a rare event.

Speaker 8 (10:04):
What we understand for sure is that the government cannot
launch like new investments or for example, increase musy spending.

Speaker 2 (10:13):
Yes, it's unusual, but then again it was used last
year because of the difficulties of getting a budget passed,
and so that remains the main question for the divided
government in France.

Speaker 3 (10:23):
How are they going to do it?

Speaker 8 (10:25):
Absolutely well, the Specialty series is another good illustration of
how fragmented is parliament in France and how little the
culture of compromise is in the countries in the country.
But in practice, if you look at the budget, we
understand that a compromise is within rich we are missing
some ten billion euros of spending cuts or tax heights

(10:47):
which are something feasible to get in the early weeks
of January. The objective remains to have a deficeit close
to five percent of the twenty twenty six GIDP, and
we would ark that that the king Maker Socialist Party
will be willing to find a compromise in order not
to run the risk of slap elections.

Speaker 2 (11:06):
Yes, absolutely, which is the thing that has caused so
much difficulty for Manuel Marco, isn't it when he did
that in twenty four But look, France has still got
the eurzon it's highest budget deficit, and they've been trying
to fund that with using shorter maturities in terms of
the brow of borrowing. That in and of itself poses

(11:28):
some difficulties, doesn't it further down the line.

Speaker 6 (11:31):
Yes absolutely.

Speaker 8 (11:32):
I mean, if we take a step back the big
picture that France is indeed like lagging its supen piers
and substantial fiscal consolidation is required over four years to
just meet its commitments.

Speaker 6 (11:44):
So in order to do.

Speaker 8 (11:45):
That, France needs to increase taxes obviously, but also to
cut expenditures, and that will be through a pension reform
in the in the coming years, that's something that the
presidential election will will look at obviously in the future,
but it's also through some technical adjustment to the issuance policy,
you could shorten you can shorten the maturity at issuance

(12:07):
to decrease the interest payments over time.

Speaker 6 (12:10):
But that's something which is risky as.

Speaker 8 (12:12):
Well because you basically increase the worl over risk, and
so it's a basic trade off between lowering the cost
of funding but also increasing the refinancing risk over time.

Speaker 2 (12:24):
When you think about the last year in France of
this kind of political uncertainty, the economic pressures, how would
you describe the year in economics and politics in France?

Speaker 6 (12:36):
So that the.

Speaker 8 (12:38):
Political situation has been obviously pretty messy, but the economy
has been pretty resilient, and quite surprisingly, the economy has
been growing pretty fast in the third quarter with open
five GP growth, which was ahead of most of its
European peers.

Speaker 6 (12:54):
So residence of.

Speaker 8 (12:55):
The economy political mess, and we would wait for twenty
six to get a sense of how consumers we'll respond
to that political mess at the end of the year,
and how films will keep on or not investing and benefit.

Speaker 6 (13:10):
Or not from the lowering of the of.

Speaker 8 (13:13):
The financing conditions thanks to the ECB easing policy over
the past quarters.

Speaker 3 (13:18):
Okay, so that is interesting.

Speaker 2 (13:21):
And there are also local elections due in March twenty
twenty six, so as well as the budget, there's also
that vote to consider too in the coming few months.
Jan thank you so much for your reflections on what's
happening in France, including that special law past just this week,
Bloomberg economist Jean Dalbar stay with us.

Speaker 3 (13:42):
More from Bloomberg Daybakeube coming up after this.

Speaker 2 (13:45):
Now for a word on the interest rate picture, then
for the year ahead, our m live currency rate stretches.
Ven Ram joins me this morning. Then, good to speak
to you. I think it's really important to understand the
shifting sands when it comes to interest rate policy. Reflect
on twenty twenty five first and how things have changed

(14:08):
this year morning, Caitlin.

Speaker 9 (14:10):
So I think that you know, we have gone from
a position where major where the major global central banks
were saying, you know what, we need to cut through
interstates and then inflation is going to converge to two
percent this year. That of course hasn't happened with most
of the major central banks. We've got inflation that is
pretty sticky, holding either around two and a half or three,

(14:32):
and so you know, the suddenly the central banks are
having to turn around and ask themselves the question, a
hang on our our assumptions? Right, we don't see inflation
converging to two percent anytime soon, not definitely, not next
year according to even their own projections.

Speaker 10 (14:50):
So there's been a bit of rethink.

Speaker 9 (14:52):
And if you think back, you know the one currency episode,
in fact, interlinked to interestates of course, is the one
that sticks out to me most is the what happened
to the.

Speaker 10 (15:02):
Euro at this point last year?

Speaker 9 (15:04):
I remember calls were for the euro dollar to reach parity,
and look at where we are now going at one
eighteen against the dollars. So you know, if there's anything
that the markets have taught central banks and investors this year,
it's about humility.

Speaker 2 (15:19):
I think, yeah, okay, a huge change. Briefly, then, what
do you think is the most important thing to watch
out for for twenty twenty six?

Speaker 9 (15:29):
Well, I think that you know, one factor that I'll
be watching deffinitely is for our fast central banks are
going to turn around and raise rates if needed, for instance,
but the Bank of Japan or they already, of course
in a rate hiking cycle. But you know, the tailor
rule rate shows that they need to be at one

(15:50):
point five given their own inflation projections and growth projections.
But you know, the Bank of Japan is kind of
going at a gay She'll bease thirty five basis.

Speaker 10 (16:01):
Points a year. I don't think that's going to cut it.

Speaker 11 (16:05):
This is Bloomberg Daybreak Europe, your morning brief on the
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Speaker 6 (16:33):
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