The Intelligence Squared Economic Outlook, with Helen Thompson

Thank Thank you very much. Thank you. Um

there are there are three rounds of thanks to be given. Uh normally there'd only be two, but I'll tell you why there's three this time. The first is to Helen Thompson. Welcome. Thank you very

Helen Thompson. Welcome. Thank you very much indeed. Professor of political

much indeed. Professor of political economy. Hang on. At Cambridge

economy. Hang on. At Cambridge

University, author of Disorder: Hard Times in the 21st century. You may

remember her also uh until relatively recently as a columnist in the New Statesman where she wrote the cleverest thing in that fine magazine. The second

thanks uh can I just echo Mia's thanks to Guinness Global Investors without whom these events would not happen.

We're extremely grateful for their support. And the third round of thanks

support. And the third round of thanks are to you who have made it uh through the traviles of the London Underground system. Uh if your journey was as sweaty

system. Uh if your journey was as sweaty as mine, I am sorry. I hope you are recovered or recovering. It is brilliant that you are here tonight. Just briefly

the format of this evening much the same as we have done before. Uh Helen and I will talk for around 50 minutes or so.

Um uh whilst that happens um if you're watching online do feel free to send your questions in. They'll appear on the iPad in front of me. Uh we'll also then

open questions to those who have struggled through the London Underground system. Um I I would emphasize uh they

system. Um I I would emphasize uh they are questions um and that means a rising intonation at the end of the sentence if you don't mind. Um and I'll take those

questions in groups of three so that we can get through as many as possible. Um

these are interesting economic times. Uh

so there is a lot to discuss. Um Helen

has um many specialtities. One of them in particular is is energy which we will come to. But there is a a sort of vast

come to. But there is a a sort of vast elephant trump-sized elephant in the room and that of course is tariffs and

their impact both here but also all around the world. Um can I start first of all uh Helen um most economists

response to the tariff announcement has been broadly along the lines of henny penny the sky is falling in. Do you

agree? Well, first of all, I should say that I'm not an economist, so I don't feel confined to giving an economist's answer. Um, I think that the general

answer. Um, I think that the general principle um of protectionism usually brings lots of economic and political

problems with it. I think when you have somebody like Trump and the advisers around him who are trying to turn American trade policy in a largely

protectionist direction but for reasons and maybe we can come to this that actually aren't just to do with trade that actually you're going to get something that's particularly penicious

in its consequences because that I think partly explains the chaos of it the fact that we have rounds of announcements tariff tariffs go up, retaliatory

tariffs go up further today. He

announces or earlier today that actually we're back to square one with China except we're not really back to square one. We're back to where things were

one. We're back to where things were before April and certain bits of tariffs stay in place including the ones um pertaining to fentinel. And so actually

when you combine tariffs with the kind of uncertainty and really chaotic uncertainty that's been introduced by the Trump administration's approach to tariffs, then you get something that's

very negative all around. I'm not

somebody who thinks though that um there is never any justification for tariffs and that the world should engage in completely free trade and I tend to

think that economists um ignore the political implications of the distribution of trade and that that isn't really a luxury that politicians

regardless really of which party they come from um can have. If we strip out then the uncertainty and I I understand it's quite difficult to do that given the roller coaster we've had for the

past what five or six weeks. If you

strip out the uncertainty um do you still see tariffs as

essentially damaging to the global order to global trade to global prosperity?

I do and I don't. I mean the reason why I say that I do is is because you know if you look like historically there are good reasons to think that the fewer

tariffs that there are that the better the collective world economy grows or the higher the speedier higher the growth rate.

I think though that we do live in extraordinarily difficult times for the world order and I think that a world in

which China does around 30% of the world's manufacturing is not one that is necessarily well suited to free trade.

And I think in that sense it's entirely explicable that a crisis of the world trading order has come about. That

doesn't mean to say that I think that the way in which the Trump administration has gone about it is either rational um

or even internally strategically um coherent. But I think that you would

coherent. But I think that you would expect that the United States would whoever is the president

think that that trend continuing such that China takes a bigger proportion of the world's manufacturing is not one that the United States can tolerate. And

I think if you want a point of sort of the of how this becomes clear, if you go back to Trump won, um so when he first declared um for the

Republican nomination in 2015, that that came a few weeks after Xiinping had announced made in China 2025, the strategy for turning China into a

high-tech manufacturing superpower.

essentially that China's share of world manufacturing was closer to like 20% than to 30%. If you look at Trump one, if you look at Biden and now Trump too,

each of these three presidents have tried to do something to shift the terms of trade in industrial production somewhat back in the United States favor. They've not been succeeding in

favor. They've not been succeeding in doing that. But I think the fact that

doing that. But I think the fact that the Biden administration showed quite strong protectionist impulses at times.

Think of the 100% tariffs on um electric vehicles from China that were put in in the spring of 2024 shows that the underlying issue is structural and isn't

just about Trump. Even though it's very difficult to talk about the last few weeks without Trump's chaos, one of the comments that came out um after the

first sort of enormous round of tariffs was was was was announced was a rather sarcastic comment from an American commentator saying, "Do they really

expect us to start making shoes again?"

You know, low margin goods. And I have to say when I was based in Europe, European Commission officials would say the same sort of thing. Do they really think our future is in sort of low

margin manufacturing? I mean, is there a future

manufacturing? I mean, is there a future for advanced economies in low margin manufacturing? Is there a logic to it

manufacturing? Is there a logic to it economically? I don't think the issue

economically? I don't think the issue really now is about low margin manufacturing. the issues about

manufacturing. the issues about high-tech manufacturing and China's success um in it and I think electric vehicles are a very good example because I think

that electric vehicles are central really to the psychic shock that China's technological success over the last few years has had not just in Washington but

in in in Europe um too is that know China's EV manufacturers particularly BYD do this better now than anybody in the world, I would say better than Tesla, if you look at it in terms um of

actual quality of product in relation to the the costs of um producing it. So if

you're the German car industry that has got extraordinarily used to being very competitive and that the German political class has got very used to

German car manufacturing being a central if not foundational part of the German economy, certain political things flow from that. I don't think you can just

from that. I don't think you can just very easily say we don't care about this and that we're just going to see Germany's place if you like in the international division of labor in this

area to China. The difficulty is though that China's size is such that it's also very difficult if you're Germany to be protectionist in this matter because the

consequences are that your companies will not be able to compete successfully in China. Now, they're not doing that at

in China. Now, they're not doing that at the moment, but they need to learn to try if they want to stay in the game because of the size of the Chinese market. So, you get both the incentive

market. So, you get both the incentive to be protectionist because you can't allow the outcome to happen, but at the same time, if you are protectionist, you make things difficult for your companies to compete in what is now the biggest EV

market in the world. So, I think we're just in an astonishingly difficult in this respect historical moment when it comes to um trade. There isn't any

parallel I think that you can look to in the past and say well this is how you can stabilize a multilateral international trading order under these

set of geopolitical or geoeconomic um conditions. The word fragile has been

um conditions. The word fragile has been used about the the global economic order. Um do you agree and if you do can

order. Um do you agree and if you do can you explain what it means? Yeah I mean I think that the world economy is is fragile. um in a structural sense in a

fragile. um in a structural sense in a in a number of different ways and I think we can see that in a way most clearly by looking at what's going on in the United States and if we just take

leave trade aside for a moment the United States debt has grown very rapidly since the 2008 crash but in

particular since the the pandemic it's something around now 120% of of GDP it's not immediately unsustainable but There is a big problem in the short term which

is over the course of the next year or so the United States needs to refinance or refund about 9 trillion worth of that debt because it's m because it's

maturing and that's one of the reasons I think why we can see such instability in the bond markets and that's where the interaction with the trade question comes because the trade news impacts

very directly on the bond markets and even relatively small movements in the bond markets has significant impacts on the American's ability to refinance this

debt over the the the next um year um or so. So I think that the American debt is

so. So I think that the American debt is destabilizing. It's if you like um on a

destabilizing. It's if you like um on a much greater scale a version of the problem that did for Liz Truss here and at the same time is that the United

States has de-industrialized and I think that successive administrations and I say that because I want to say that the Democratic president in in Biden came to

the same conclusion thinks that that's not something that's politically viable.

I don't think they've got any real idea what to do about it. I don't think any of them have had a strategy for reshoring manufacturing production to the United States. But I think that they

have to try and that even if that they don't succeed, if they were to be seen to be doing nothing and simply to say that the present trajectory of American

de-industrialization and China taking an ever greater share of manufacturing, world manufacturing um production, that's not politically sustainable, I think, in the United States. If it were

sustainable, then we wouldn't have seen the first Trump presidency, I think, let alone the second Trump presidency. And

so, in an economic sense, what is happening is is that multipolarity, if you like, is already here. And the

Americans have got to adjust to it. And

they're going to adjust to it in ways that are going to inflict quite a lot of short to medium-term pain upon themselves in doing so. And that then has consequences for the rest of the world including obviously for China

itself. So I think that these dynamics

itself. So I think that these dynamics actually lead to cumulative instability in the in the world economy.

What the picture you're painting is of a world that got to a particular point in particular an America and Chinese relationship that got to a particular

point that we'd never seen before in terms of manufacturing dependence if you will. um a a a president or even two

will. um a a a president or even two presidents who took pretty significant steps to try and redress that. But I

suppose the question is do you believe manufacturing will reshore? Do you think it is a reality or

reshore? Do you think it is a reality or or are we in such a new world that you can't really sort of prophesy about that?

I I think that it's it's very difficult to see how the United States can do that quickly. Yeah. Um and I think that if

quickly. Yeah. Um and I think that if you look at the inflation reduction act um passed by the Biden administration is

you know at the center of that was an attempt to use the energy transition to achieve reassuring of American manufacturing um production as well as

doing the energy transition um itself and that was seen as something that was necessary to compete with China. It had

a clear geopolitical motive and at the same time I think it was seen as something that was necessary to stop a second Trump presidency and that obviously like failed. Now, if you think

about the prospects for European countries, not least ours and Britain, trying to re-industrialize, when the Americans with the amount of actual

fiscal firepower that went into the inflation reduction act can't really do it, then I think that that suggests that either it's for the long haul or that it's just a very difficult thing to do.

And why would China give up those advantages? And and that gets us on to

advantages? And and that gets us on to AI, which I think has made this situation even more complicated, is that China over the course of the last 6

months has delivered another psychic shock um not just in Washington again, but in in Europe, which was deepseek. It

was a particular shock in Washington because it showed that despite the fact the Biden administration and it had been the bigger driver here I think had declared a semiconductor chip war on

China starting in 2022 and intensifying it in in 2023 that that failed. I mean

the point of it was to stop China being able to do something like deepsek and actually China showed that it could get around the sanctions. I don't believe that the sanctions were um that it wasn't necessary for it to have those

inputs. It was more that China found

inputs. It was more that China found other ways of evading the sanctions. So

the United States declared tech war on China and it lost at least where AI is concerned. And so I think we have to see

concerned. And so I think we have to see then that the American response to that is to say well that has profound geopolitical security implications for

us given the importance of AI for defense and drones um etc. We have to try to do better. We have to try to um

manufacture um things that we used to manufacture in the defense industrial sense. we have to do the very high-tech

sense. we have to do the very high-tech end better. The difficulty is that

end better. The difficulty is that China's also got human capital advantages. It's now clear, I think, in

advantages. It's now clear, I think, in terms of the technical education of the Chinese compared to what's going on in the United States, despite the fact the United States got the best universities um in the world. So, this is incredibly

difficult competition that the United States now um faces and it's it never faced a competitor in the Soviet Union or West Germany or Japan. If we think about its economic competitors during

the course of the 20th century that could do what China's done and China's doing this when it is still actually a middle inome country if you look at it in terms of um per capita um income. So

I think that the geopolitical implications of the structure of the world economy and the US China relationship have become actually terrifying in Washington. Can

we talk about Britain a little bit? Um

two trade deals announced last week. Um

the consensus appears to be that actually the the uh trade deal with India was perhaps a little more interesting uh than uh what was deemed to be a rather thin trade deal with

America, maybe a sort of holding pattern trade deal. When you saw those, did you

trade deal. When you saw those, did you think this is this is definitely good news for the British economy?

That's a I think that's a quite a hard question to answer. Not I certainly didn't think they were unequivocally good news for the um the British um economy. I I think there's obviously

economy. I I think there's obviously lots of um potential for growth of trade um with um India. I think the politics of some aspects of the trade deal with

India are going to be quite difficult.

Um I think in terms of the American um deal as you said Johnny it's somewhat on the thin side and I think it's also got to be put in a context of how does that

fit with the British ambitions or at least the ambitions of the StarMA government to reset relations with the European Union. Um when effectively what

European Union. Um when effectively what this says is we want to take advantage of being outside the European Union. We

want to try to be one of the first states to get a trade deal um with the United States and get tariffs down to the sort of the basic like 10% um level.

And it's not really the way in which the European Union has approached the question of um trade um with Trump since um liberation day as we're supposed to

call it to to call it was um announced.

So I think that whilst you there's always some positives to trade agreements, the politics domestically is complicated and I think that the US one

in particular really does raise some quite significant questions about what our relationship with the European Union is going to be in the future. our

economic relationship. I mean, you know, the the government will always say, you know, we don't have to choose. Um, and

then there'll be any number of different metaphors of bridges and footpaths and whatever you want to call it. Do you

think you sort of do have to choose?

Yeah, I mean I think an awful lot that's happened um or a whole set of of trade questions um since um the United Kingdom left the European Union or indeed in

that transition period between the the 2019 general election um through to us leaving and I would include the the pandemic um in this has shown that

actually we do choose because that's what it means to be outside the European Union and the European union exists and sometimes I think that the leaders of

the European Union governments don't like this fact in a geopolitical world in in which it's insistence that there

are if you like dege geopoliticized economic questions that can be about the single market I mean the integrity of the the single market are made much more complicated like by geopolitics in some

ways they've now been made much more complicated by the obvious importance of the UK in security terms to the Eastern European members of the European Union

post-Russia's invasion um of Ukraine and what do you do about defense procurement and working with Britain in relation to the the the single um market. I think

that the questions are as important in a way for the EU as they are for us. But I

I don't think that we can fall back, as you say, on finding metaphors to say we're being bridges and etc. That actually it's hard choices and you can't

have a trade policy that's aligned with European Union rules that insists on dealing with Trump in his own in your own terms because that's that's not the

way that it works. And I think that it's also true um that if you look at the things that some of the European Union

states will want to do to try to avoid pressure from Trump, which will be to buy more American liqufied natural gas.

That's something that we already buy quite a lot of already. We're not in the same position in relation to our energy choices or gas choices in particular as

some of the European states um are. I so

I think that although it's very clear that the Star administration does want a reset in economic terms and in security terms with the European Union and trade's got to be central to that. I'm

not at all clear how that comes about particularly in the context in which there's a importance being put on being

first in line so to speak to um get closer to Washington.

Um I want to move on to energy in a little bit. Um uh I would remind uh

little bit. Um uh I would remind uh those at home and some questions are already coming in or in offices wherever you're watching and those uh here that you will be able to get to the end of my

blundering questions quite soon and put your own questions to Helen instead just just to sort of close off free trade for the moment. Um we we

speak sometimes or the commentary sometimes seems to suggest a sort of sort of unbroken

um uh line of greater and greater free trade over the past what 150 years. It's

not the case is it? Free trade is as as a sort of ideology or global ideology amongst developed and developing economies is is relatively new. Yeah. I

think one thing that is really important to see in the American part of this story is that the period in which the United States has been relatively committed to free trade in its history

is much more the interlude and that protectionism is much more the norm. The

only real period in which I'd say it's relatively uncontested is from the Bretonwoods conference in 1944 through to the end of the bread and wood system

in the early 1970s whether one says it ends in 1971 or 1973. And indeed, if you go back to that

1973. And indeed, if you go back to that moment when to all intents and purposes, Richard Nixon was ending the bread and wood system when he ended dollar gold

and convertability. He put up tariffs at

and convertability. He put up tariffs at the same time and he did it for a very explicit reason. They were going up

explicit reason. They were going up until other states agreed to devalue their currencies against the dollar. One

of the objectives I think that Trump also has with with tariffs, it's not the only one. That's why the policy becomes

only one. That's why the policy becomes so um confused. Um, but there's nothing in that sense unprecedented for an American president saying we're going back to being more protectionist because

we don't like the outcomes, not just in terms of the balance of payments, but we don't like the outcomes in terms of um currency and we're going to try and tie questions about the balance of trade to

questions about security. Again,

something that not just Nixon did, but actually Lyndon Johnson did too. And I

think if you look at then the pattern in let's call it the globalized economy from the 1990s the period that's taken to be globalization

um you know the last completed round of trade talks within the world trade organization goes back to the creation of the world trade organization and the

Uruguay round that came to um completion that the Doha round never got um completed. you can see the backlash

completed. you can see the backlash against trade not just in the United States but in quite a number of developing countries too by the end of the

1990s. So I actually think that trade is

1990s. So I actually think that trade is something where the norm is much closer to protectionism than than seems the case. At the very least, even the states

case. At the very least, even the states that are most rhetorically committed to free trade, like the European Union, I know it's not the state, but is for the purposes of um trade, there's always

exceptions and and qualifications to that. probably the only state large

that. probably the only state large state where you can say there was an unbridled commitment to free trade for a substantial period of time was Britain from the repeal of the corn laws um

through to the 1930s. And do you see again and I know

1930s. And do you see again and I know that you've spent a fair amount of time trying to divine the reasoning behind um Donald Trump's tariffs. Do you see an

argument about sovereignty there as well in that you know when you agree to free trade you are in meshing yourself in the negotiating process the World Trade Organization process foreign

entanglements um when you raise tariffs you're saying we do what we want yeah I think it's an interesting question I I don't I could

be wrong here but I don't recall Trump using the language about sovereignty um when he's

talking about tariffs. Um I think that it is there in the American conservative tradition or the American Republican tradition. It's the reason why if you go

tradition. It's the reason why if you go back to the immediate years after the bread and woods conference that the international trade organization that was supposedly going to be, you know,

the formal structure of the post-war international economy never came into being because the US Senate refused to ratify the treaty and GAT came in place and it was supposed to be sort of a

provisional arrangement until that issue had been fixed but it was it was never fixed. If you look at some of the

fixed. If you look at some of the arguments that are made by American Republicans in the '90s against the World Trade Organization, they're very much in the language of of sovereignty.

I think Trump is more of a sort of instinctive protectionist than than than that. He's just got this idea in his

that. He's just got this idea in his head um that tariffs are good or beautiful as he likes to call the things that he likes the most. um and that he

is willing to say that trade is a zero sum game. So if some country's got a

sum game. So if some country's got a surplus over the United States, in his mind it's over the United States rather than being a surplus within a company um like deficit that that's a that's a bad

thing. And he also wants to use um

thing. And he also wants to use um tariffs, as I said, as a tactic in trying to achieve other outcomes. So I

don't think he's particularly concerned about sovereignty, but there's no doubt that there is a whole, as I say, American Republican tradition that does focus on the sovereignty threats,

particularly when free trade is entrenched in international organizations.

Can we turn to energy? Um because the e energy price shock um that followed the Ukraine war um was a very significant

political and economic problem for the UK and for other countries but certainly for the UK it it felt rather special. Um

do you think the UK is as vulnerable now as it was then? And is in your understanding is anything in hand to

reduce those vulnerabilities?

Yeah, I think that the Europe the UK actually does have a a really difficult position um even in a comparative sense

within Europe um in its energy position.

Um, we have been a net energy importer since around 2004 and that brought to an end the interlude that was created by North Sea

oil um and um gas and at that time or around that time it's when um obviously Tony Blair was prime minister and Gordon

Brown was the the chancellor. Um the

working assumption that they made about electricity was that by the time where we are now, the middle of the 2020s, that it will be possible to run a

grid fundamentally of solar and wind and that it wasn't necessary really for the UK as the nuclear reactors reach the end

of the life cycle, they wouldn't need to be replaced. So if you go back to the

be replaced. So if you go back to the 2004 I think it is energy white paper that the Blair government um produced it's it's optimistic about what solar

and wind can do and it's quite negative about nuclear not least for some good reasons because of the costs of now we are where we are in the middle

of the 200 and and 20s and what we can see is for north European countries with the weather which we know that we have in North Europe that it's very difficult

to get around the intermittency problem.

The storage requirements are such that the technologically can't be delivered at scale um for the problem. And if you

look at then the situation that the UK faces is is that we committed to elimination of coal. Um we're not a

country that has uh particularly um sophisticated hydropower um system. Um

and we've been on a downward trajectory where nuclear is concerned and we've been taking a long time to build the new nuclear reactors that are or the one at

least that's that's under um construction. So that that means that

construction. So that that means that the amount that we're regularly using for electricity alone um of natural gas is pretty high in

comparison to most European countries and pretty much all European countries are doing worse where energy is concerned in this respect than the United States or indeed China like for

that um matter. So we have a particular like vulnerability I think because of being a north European country with the underlying energy mix we have for

generating electricity and then if you look at the way in which our houses are heated is we're fundamentally gas boilers rather than electricity. If you go to France

electricity. If you go to France electricity does much more of the work in terms of heating houses than it does in in Britain. So we've got a double

vulnerability on the high gas prices. Um

and then although obviously gas prices, natural gas prices are well below the peak that they were not just in 2022, but in the latter part of like 2020 one, they're still high compared to what that

they were before the acceleration started in the second half of of 2021.

And just on top of it all is we've also got the problem um that we for other reasons as well have a rather large trade deficit. Um and we're using more

trade deficit. Um and we're using more and more imported hydrocarbons as the North Sea like winds down. So our status

as a significant net energy importer weakens the balance of payments and that weakens sterling and that that can have effect in the bond markets and that's the kind of underlying problem if you

like that hit this trust is all our weaknesses come together in crisis moments to reinforce each other. So if

we had a better energy position we would also I think have a better macroeconomic um position. Once upon a time, balance

um position. Once upon a time, balance of payments for take you away from energy for a moment was was a sort of headline issue and and governments would well allegedly fall on issues of balance

of payments in the 1970s. It seems to have just receded into the background perhaps not for our guests from Guinness Global Investors um but for the

everyday. Why is that? Well, I think

everyday. Why is that? Well, I think essentially what the the the 70s did and financial liberalization did was to make

it much easier for um advanced economy states in the short to medium term anyway to finance balance of payments. I

mean, you weren't in the situation where you actually had to go to the International Monetary Fund like we did in like 1976 when you when you hit a crisis. The problem is is we can see

crisis. The problem is is we can see over time once you have if you like something that might be called like a structural like trade deficit um is that

it has a weakening effect on your currency and then that can have the potential in crisis moments to mean that interest rates have to go up to defend your currency. That actually happened to

your currency. That actually happened to the Thatcher government quite a lot by the middle of the the 1980s. That has a negative effect on growth. that makes

the costs of borrowing much more um expensive than they would um otherwise um be. So it's not that you can't do the

um be. So it's not that you can't do the financing of a balance of payments deficit. It it just has a set in the

deficit. It it just has a set in the long term I think of negative consequences that make the general problem of macroeconomic management more

difficult than it would be without it.

Let's go back to energy if we may. Um

you you mentioned the the the problem of intermittency of the wind not blowing and the sun not shining to be very clumsy about it uh and the need to

therefore have carbon-based uh fuel generation on hand. How at all do the

issues of intermittency and net zero the ambition of net zero meet?

Well, I think that this is is really hard and I think that I come back to a point I've made in a number of different

places um really over the last 5 years which is that it is quite staggering in retrospect how the UK parliament came to

legislate for net zero in 2019. It was

June 2019. Theresa May was a lamed up prime

2019. Theresa May was a lamed up prime minister. It was incredibly difficult,

minister. It was incredibly difficult, as we might recall, at times, for even standing orders about how votes could take place in the House of Commons

to be agreed upon by that House of Commons. There was nothing that it could

Commons. There was nothing that it could agree on about Brexit to do on anything.

And yet somehow amidst of all that conflict with a lame duck prime minister is the House of Commons decided without any meaningful division um that we were

going to reinvent in this country the material basis of Western modern industrial civilization over essentially a 30-year period without a strategy for

doing so. not even really understanding

doing so. not even really understanding like how much the net bit of this was going to do of the work of like net um zero and I don't think that there were

people standing up in the House of Commons who were saying well why are we being that optimistic uh about solving

the storage problems um that are there in the face of intermittency and why is it the case that we can be as optimistic

about using solar and wind as say the Spanish can be about using um solar who I'm leaving aside what happened a few weeks ago but who can do a lot better simply on the simple fact of how often

the sun shines than any north European country um can um do and I think that the reckoning for not having that

political discussion in making the net zero com commitment back in 2019 is now coming And it is part of the way in

which Nigel Farage is trying to reinvent the reform um party. And I don't think that the government star's government has got answers to that anymore really

than um Mishi Sunnak's government did.

And Mishi Sununak tried to pull back from the net zero agenda, but he found it in practice very difficult um to do so.

Were you advising? Would you be saying pull back,

advising? Would you be saying pull back, pull back? Yeah, I think that there has

pull back? Yeah, I think that there has to be a way in which we can be really serious about climate change and really serious about energy to be realists

about both. And I think the difficulty

about both. And I think the difficulty in this country, it wasn't only in this country, but the one that I've observed the most carefully um obviously is it got turned into a binary question.

Either you were serious about energy questions or you were serious about climate change questions. M and I don't think that's the right way of of of of

thinking um about it and that every country has to have an energy strategy.

It has to be serious about that because energy is quite literally the life force of the universe. We can do nothing economically without um energy. So

wishful thinking isn't going to get us very far. Now that doesn't mean that we

very far. Now that doesn't mean that we can't be committed to an energy transition. In fact, I think that we

transition. In fact, I think that we have to be committed to an energy transition over the medium to long term for reasons to do with the dysfunctionality of fossil fuel energy

markets themselves and not just because of climate change. It just means that you have to be realistic about what can be achieved in energy terms over the

time frames that we're talking about and to recognize that there is no parallel in human history for the kind of commitment that net zero was because every energy transition that has taken

place historically has been about adding new energy sources. It has not been about replacing energy any energy sources. Now that doesn't mean energy

sources. Now that doesn't mean energy sources can't be replaced if you look at for long-term horizons. But you've got to understand, everyone's got to understand that what it would mean

actually to eliminate energy sources in a world in which the expectation is that energy consumption will continue to rise. I mean, we are incredibly lucky in

rise. I mean, we are incredibly lucky in living in a country where per capita energy consumption is as high as it is.

It's not the norm to consume as much energy um as we all do. And it's not like those parts of the world that don't consume energy at the rate in which we do don't want that too. they that they

great luxury to be able to live. That's

the world in which that's the world development. Yeah. That's the world in

development. Yeah. That's the world in which we live. That's what it means to be a rich country is to be an energy rich country. What it means to be a poor

rich country. What it means to be a poor country is to be an energy poor country.

And they don't want to stay energy poor country. And we have to think

country. And we have to think realistically about energy in all respects. And this is the thing that the

respects. And this is the thing that the Chinese are very good at. The Chinese do not think that it's a binary question.

They're doing astonishingly well compared to the rest of us with any number of renewable things. But it

doesn't change the fact that their fundamental approach to energy is as much energy as possible by whatever means is necessary to get to have that um energy. They don't think in these

um energy. They don't think in these binary ways. But is it your presumption

binary ways. But is it your presumption that when the a the new government walked into the ministries and you know one of them was Edmand that there will

have been civil servants coming up and saying look these suggestions these ideas this ambition is broadly speaking impossible. Um at which

impossible. Um at which point politicians have a decision to make. I mean, I understand that you are

make. I mean, I understand that you are very learned, but there are other people who presumably know the numbers as well.

There are people who know far more about energy than I do. Not this because they're actually engineers rather than like studying politics.

Um, I don't want to make this too personal about Ed Milliban. Um but and it has got very personal in the newspapers but so let's I mean what I

think is true is is that Ed Milliband uh has us an article of faith that the energy transition is necessary for

climate change reasons and that any compromise with that um is not to take climate change seriously. And so I I think that he

seriously. And so I I think that he succumbs to wishful thinking about the energy questions because he doesn't want to think about the energy questions. He

wants to think about climate change. And

you can't actually think about climate change in the terms of actually having a different economic structure so we produce fewer carbon um emissions

without thinking about energy. And yet I don't think that that's where his mind goes. I think his mind stays in the

goes. I think his mind stays in the article of faith about climate change.

So I think that in some sense he mentally shuts out what he doesn't want to hear about energy.

Um Helen and I are going to talk for about five more minutes and then we're going to move on to questions. We have

questions coming in from the online audience. Thank you very much indeed. Uh

audience. Thank you very much indeed. Uh

look forward to getting to those and we will also speak to you here um uh in St.

John Smith Square. Um you've spoken of the need and written of the need for an energy revolution. Can you sketch out

energy revolution. Can you sketch out what the the shape of that? Well, I'm

not sure that I think that there should be an energy revolution. Um, not at least because I don't really think it's possible in any time frame that we can think about. But what I've been wanting

think about. But what I've been wanting to stress is that if you take the energy transition seriously, it would constitute an energy

revolution in the sense that the entire basis of modernity if you like of modern industrial civilization rests on fossil fuels. That

is what the historical change the industrial revolution to my mind is is fundamentally it will be better called the industrial energy revolution because

that would get to the fundamental change I think in some sense in human existence that came about when we moved from primarily using human and animal energy

with some wind title to moving fossil to to fossil fuel energy. So if we want to change that and move away from fossil fuel energy and use other forms of um energy,

we are redoing the industrial revolution. We are redoing what it means

revolution. We are redoing what it means to be a modern um human um being. And so

that to my mind entails, if you like a counterrevolution against the form that of energy revolution that the industrial revolution um constituted. And if you

look at what's happened um in terms of the energy changes that have taken place, including the one that moved from say using

wood for burning it for heat to using coal for burning it to heat, it wasn't the case that wood stopped being used as an energy source for heat. There's still

lots of wood being used for energy sources today. In the same way, when oil

sources today. In the same way, when oil came along, it didn't replace coal.

There's more coal being burnt in the world than there's ever been in human history um before. And that's what I mean in saying that actually when we say we're trying to achieve like net zero,

we're trying to achieve something that hasn't been done before. That doesn't

mean to say that it can't in principle be done. It just means to say that we

be done. It just means to say that we need if we're going to be serious about it to understand the immensity of what it means to move to net zero. Let's go

from one immensity to another and I want to bring in the thoughts of Martin Wolf who gave the last economic outlook uh

here actually um and and he wrote in the Financial Times I think last week um essentially that the old economic order

was dead. Do you agree?

was dead. Do you agree?

I do in the sense of that I think that the old geopolitical economic order is dead in the sense it's that

China's rise both in terms of the size of China's population and its technological

success and actually maybe the third thing and the fact that the share of manufacturing now is so concentrated in

um China means that the world certainly that I grew up in um you know as a child of the 70s essentially I think is is is

disappeared and I I and I think um that if you think about that through the lens of China it's where it comes out most clearly and I go back in a way to saying

it in terms of the energy point in the 70s then most of the high per capita energy consuming states were western

states not entirely because of the Middle East some of the Middle Eastern ones um they weren't particularly Japan accepted Asian states

um that's simply no longer true Asia is the most populous like part of the world that fact alone means that the old order the one that we grew up in just I don't

think exists in any way shape or form any longer and Then if you look at a more compressed time scale and you look at what's happened say since the

economic crash like in in in 2008 is the world economy is just fundamentally become geopoliticized. I think there was always

geopoliticized. I think there was always undercurrents of geopolitics. I mean I wouldn't spend as much time thinking about geopolitics as I do if I didn't think that was the case. But it's much more overtly on the surface now. It's

inescapable part of economic dynamics in a way that I don't think was quite true before the crash.

I know you're an academic and you're sort of somewhat above the sort of the partisan fray, but when you look at the manufacturing and economic power of

China and ally it to the fact that it is led by a government broadly speaking inimical to western values, does it cause you

concern?

Yes, in the sense that I I don't see any way in which that a world economy in which

China has the part that it does and the United States has the part of which it does and the European Union has the part in which it does and I'm saying this trying to say this in a non-judgmental way. I just don't see any way it can be

way. I just don't see any way it can be of stabilizing it. I mean I I I think there are

it. I mean I I I think there are consequences of China's form of government for these issues. But I think

that even if China was more democratic or more liberal in a deep sense, it wouldn't really make any difference to the instability. Right. Thank you very

the instability. Right. Thank you very much. Let's go to questions from the

much. Let's go to questions from the audience and also those that have come in online. I'm going to do it in groups

in online. I'm going to do it in groups of threes. First of all, you sir. Yeah.

of threes. First of all, you sir. Yeah.

Uh hi Helen.

Um in a world in which is um things are unstable or unpredictable countries with lots of options so high high optionality countries might be in a better position.

Would you say that Britain would you characterize it as being a high optionality country? We got lots of

optionality country? We got lots of choices about we what we do or is it a low optionality one and we kind of have a small number of choices and have some maybe you know some bad choices to make.

Thanks. Thank you very much sir. Uh big

question. Do do you think we are worse governed in the UK than we were a generation ago? And if so, by both our

generation ago? And if so, by both our politicians and our administrative class, why is that?

Thank you. And then the microphone to the gentleman there with his hand up in the blue shirt. Thank you. Hi, thank you for your analysis on the uh energy market. Very interesting. I note most of

market. Very interesting. I note most of your comments uh were on a macro supply side. To the average consumer though,

side. To the average consumer though, what really mattered during the crisis was pricing. To what extent do you think

was pricing. To what extent do you think of off what was totally captured by the uh energy industry and as a result prices were a lot higher than they used

to be. just to give two uh examples. Uh

to be. just to give two uh examples. Uh

it appeared at the time and there was a lot of talk in the press that wholesale prices that went into the energy formula were based on the European wholesale price rather than the British wholesale

price which was uh a lot cheaper as we had an excess supply because we couldn't get the excess down the channel converter. And secondly

converter. And secondly that the transmission cost looking at the formula. I know this is quite

the formula. I know this is quite detailed but it's illustrative uh rose very significantly along with the gas price which struck me as absolutely perverse because you're still

fundamentally putting the same amount of gas through the same pipes albe it at a higher price. Thank you. Thank you very

higher price. Thank you. Thank you very much indeed. Um there's a there's an

much indeed. Um there's a there's an article in this the spectator online by Mary Wakefield at the moment saying why don't men ask questions? She's referring

to dating. Um, I'm going to say why don't women ask questions. So, when I come to the audience next time, I would love to see some questions from women as well. Uh, let's start with the I think

well. Uh, let's start with the I think it was high optionality and low optionality. And that was for Britain,

optionality. And that was for Britain, wasn't it? Yeah. Yeah. I mean, I don't

wasn't it? Yeah. Yeah. I mean, I don't think that we have particularly good options.

Um, and that's partly the legacy of history.

um in the sense of we've had very complicated relationships with Europe in one way or another and I don't just mean as the European um union and that in

circumstances in which the European Union developed in the way in which it did and particularly in which we stayed out of um the Euro zone. I mean I think for good reasons that we stayed out of

the the the Euro zone. I think we're kind of doomed to have a complicated relationship with the European Union without good choices. Um, I think that that was made quite clear by the the

whole saga of of Brexit from the point in which Cameron called the referendum until us actually leaving the European um union. As I've already said, I think

um union. As I've already said, I think our energy choices are are pretty difficult. Um, some of them are not

difficult. Um, some of them are not things that we can control um being like the weather. Some of them are the legacy

the weather. Some of them are the legacy of I think poor choices um in the past and then the interaction with the the macroeconomic problem. It doesn't mean

macroeconomic problem. It doesn't mean that we're powerless completely. I mean

I think for instance that one of the things that the um present government has not done a good job on um because

it's one of the easier wins uh in the set of not great options with which it is confronted is house building.

um in terms of of of as a as a engine for um some growth um in the um economy um but I don't think that we

have the options of um the United States certainly but even if you look in a European context and let's say we were trying to think that

there are certain perhaps advantages um that the UK in principle has in the AI I field compared to other European countries. But if you look at it in

countries. But if you look at it in terms of our electricity costs and you look at the importance of electricity for AI data centers, then we have a

problem. I mean, why wouldn't you go to

problem. I mean, why wouldn't you go to Spain where the energy costs, electricity costs are going to be significantly cheaper than than than

than come to the um UK. So I think a lot of British policy is having to make the best of bad choices. Um, which leads us towards the question from the gentleman

in the front about are we do you think we are better or worse governed than I think you said 20 years, several generations ago or whatever, whichever way you want to phrase it.

I I I think that if the point of comparison is 20 years ago um I'm not really that convinced that the the quality of the political class I

think the ministry of class is a bit more complicated like question like has gone down. I think the fundamental thing

gone down. I think the fundamental thing that has happened is is that our structural economic position ultimately I believe driven by the energy position

has deteriorated very substantially. Um and that that period

substantially. Um and that that period which Mvin King described as nice which is essentially from about 1982 to

2005. So he meant noninflationary

2005. So he meant noninflationary continuous economic growth by nice that was bound up not just with the general

um conditions of lower oil prices but also the particular British situation in relation like to the North Sea and that that interlude like came to an end. So I

think that the political class faces much harder questions than than it did.

Um, I mean, I a little bit think there's been some deterioration in quality. Um,

sometimes I think maybe I just being um, nostalgic for something that isn't true, if you see what I mean. And that um I

think what we can say is that the education and obviously I take partial some not personal responsibility

but I'm not exempting people like me from this at all. I'm not sure that we do a that good job um

of educating um the political class. I I think that the administrative class there

is been some changes that do worry me.

Um and that's partly I think about the um demographics of recruiting and giving senior pe positions to people who are significantly younger than would be the

case. I think I remember reading that

case. I think I remember reading that the average age in the treasury in 2008 in the crash was 29 I think for for dealing with the kind

of incredibly complicated situation that the crash was in 2008 seems to me to be like rather young. So these questions they do worry me as I say I I always

want to guard against the argument where you simply say oh things were better when you were younger. Um but I think that the fundamental change is actually about the difficulties of the

predicaments rather than about the quality of the the the politicians.

on the question about the costs and the pricing. I mean, I I'm sure there's

pricing. I mean, I I'm sure there's something in what you say like on on both counts. Um, what I do think though

both counts. Um, what I do think though is that there was a very genuine um gas price

shock in not just 2022, but in 2021. and

and I've spent quite a bit of time in 2022 insisting on this point about 2021. Um

2021. Um because I think there was a tendency to sort of say, "Oh well, it's all Russia's fault and if Russia hadn't invaded Ukraine, none of this would happen."

Whereas to my mind it was a much deeper structural problem that was manifesting itself and was manifesting itself before Russia invaded and that Russia then like

intensified. And I think the reason why

intensified. And I think the reason why I think that this point is important is because it seems to me that what has happened in the last 10 years probably

now um is that the natural gas market particularly liqufied natural gas market has become a center of tension between the

European and the Asian parts of Eurasia and that's come from the rise of Asian demand in gas in the same way in which Asian in demand particularly

China's in the two first decade of the 2000s changed oil markets dramatically then the rise in their gas demand particularly China's transformed

um gas markets it created if you like structural competition between Eurasian countries in those um markets and that European countries benefited in 2022

actually because they could pay were able to pay higher prices than most Asian states were willing to um pay. So

although I don't doubt that that actually there were some taking advantage should we say of the energy so shock situation by um

energy companies. I think that the

energy companies. I think that the underlying issues about changes in supply and demand were real and that actually they were driven in the first

instance on the demand side and not by what happened with Russia's invasion on the supply side. Thank you. Uh some

questions that have come in from uh the online audience. First one, how much is

online audience. First one, how much is the economic instability of the moment fueling the electoral success of reform?

How seriously should we take reform?

As I said, I I do think that the net zero issue has become something that reform is successfully um exploiting. I

don't think it's the primary issue at the moment. I still think that migration

the moment. I still think that migration is the primary driver of reform support plus and this is where I think that energy is at least sort of subtext if

you like um because it's one of the best examples of the difficulties that the star government have um faced a lot of the support for reform it seems to me is

driven by projection is the reality of the last six years now is that a conservative government was elected in this country

with a quite reasonably sized majority and very quickly it fell apart. I mean

you've only got to think then to the autumn of 2022 when they ended up with you know three prime ministers in um 6 weeks. Boris Johnson was uh elected in

weeks. Boris Johnson was uh elected in part because he wasn't Jeremy Corbyn but also on the get Brexit done that was tied to migration and then implemented a

policy that went off in the opposite um d direction. Um there's complete loss of

d direction. Um there's complete loss of faith in the conservative party as a governing party to the point that it's quite difficult to see how the conservative party recovers anytime soon

from that. And then I think Labour won

from that. And then I think Labour won for no other reason actually than how useless the Conservatives were. So the

the projection went from how could the conservatives be like this to well they're the opposition that's what you do when you lose complete faith in the government. You put the opposition in.

government. You put the opposition in.

But actually even that was quite hard work given the small proportion of voters historically by historical standards that voted for Labor. and very

quickly it doesn't deliver. Um, and it gets itself into a whole set of both scandal kind of things with the expenses, but also decisions that are

intrinsically very unpopular like winter fuel. Um, and so it doesn't look that

fuel. Um, and so it doesn't look that their ability to govern is any better than the government you've just kicked out. So what do you then do? You project

out. So what do you then do? You project

onto something else. And if reform had to in any way govern, the same thing would happen to them. I mean I don't think they'll even get as far as the next election without it being projected

somewhere else again just because I think the underlying instability is so deep and in that sense I think the failure of British governments to solve

if you like the growth problem underneath that which think to a significant extent lies the energy problem is fundamental to why the voters

or enough voters just keep almost like grasping for something else to put in place. Are you at all surprised by what

place. Are you at all surprised by what you might describe as the impatience of the electorate um that the idea that after six or nine months of a Labor

government somehow the country would be if not turned around then turning around?

No, I'm not surprised at all. Um because

I actually thought that this is what would happen to the the the the government the Labor government. I mean,

and partly because I don't think that they understood that they won the election because they weren't the Conservatives rather than because they were the um Labor um party. But I I

think that the the depth of the loss of confidence in the British governing class is too deep to think that you don't get a chance.

You don't get a chance. No. Yeah.

particularly you don't get a chance if you promise something and then you can't deliver it or I think that part of of

this goes to Star's problem is is that is that he's not particularly convincing in the guises that he adopts. I mean, so

if you take the the the get tough on migration speech that's come is it's the speech written by Morgan

Mcweeny like pretty clearly it doesn't sound very K star when when he gives it and so actually you know if this is what that they want to do as a response to

the reform problem is say okay we're moving to the right like on migration you wouldn't say that K starama was the prime minister that you would have to do Let's take another question uh from the

from our online audience. Is there any clear Trump strategy? This is an easy one. Um if there isn't, can we take

one. Um if there isn't, can we take heart from the fact that the economic and political system survived his first administration and appears to be surviving the second?

I mean, I think that Trump one and Trump two are really quite different from each other. Um I I think that it's not at all

other. Um I I think that it's not at all clear that actually Trump wanted to win in 2016

um or that he expected to win. And

obviously if you look at trade policy in the in the first term, you know, he did turn to a trade war in 2018 with China

and there were some um tariffs on the European Union steel um too and there was renegotiation of the NAFTA agreement

with with Mexico um and um Canada. Um

but if you look at the central plank of that which was the attempt to reset trade with China, he was quite pragmatic about it and he actually did get what he

wanted which was the agreement in January 2020. It was the pandemic that

January 2020. It was the pandemic that then ensued and meant that that agreement was never really like implemented.

I don't think there's anything that was anything as like as chaotic uh in the approach um on um during the the first

term and if you take another instance um Canada again quite confrontational on trade with Canada in the first term nothing like what he's been like this

time I mean there's was no mention last time of annexing Canada um um and if you listen to him. You

know, I think he is sort of half serious about this. He does think that Canada is

about this. He does think that Canada is a problem for the United States. I think

in a geopolitical context in terms of competition with um China, China's Canada's in his mind openness to Chinese

um influence. So, I'm not so sure that

um influence. So, I'm not so sure that we can take comfort from how things worked out last time and say that that's what things will be like this time.

Nonetheless, I would say um that although I think that the nonstrategy tactics, whatever we're going to call them, are chaotic, that

there is some rhyme and reason to it as an American president trying to reset the world order. And I think that if Camela Harris had won the election, we'd

have seen a different way of trying to reset it. It would have taken much

reset it. It would have taken much longer into the presidency for it to become clear. But I still think there

become clear. But I still think there would have been some attempt at reset and partly that is because the United States cannot continue with its debt in

the way in which it it it it has. And so

something is going to change. And as I say, what's very disruptive and risky is the way in which Trump is going to go about trying or is going about trying to

bring about that change and being willing to take what are risks that are normal politicians simply wouldn't do in a democratic politics. And I think if

you wanted a good example of of where he's both different from himself last time and different than politicians that America has produced at least since

Jimmy Carter with the comments that he made about how well these girls don't need $20, they can make do with two. The

sort of willingness to attack consumption almost to attack excessive consumption. That's not something that

consumption. That's not something that any American president sounded like since since Carter in the 70s in the context of a of an economic crisis. And

what it suggests is Trump's willing to sort of turn on their head certain shibiliths in in in um in democratic politics that you don't do that particularly in American democratic

politics. You don't attack consumer

politics. You don't attack consumer interests. And if he's serious in what

interests. And if he's serious in what he says, and who ever knows whether when he is when he isn't, um, then that would suggest someone who might be prepared to accept quite a lot of disruption to try

to get what he wants.

Let's go back to the audience. Um, and I see a lady there. I think there's a lanyard. There may be a lanyard or at

lanyard. There may be a lanyard or at least a scarf. Forgive me. Thank you.

And then right at the back uh in a sort of beige or white top, forgive my fading eyes and the poor lighting. Um, and a gentleman finally in a short sleeve top

or a t-shirt over on the edge there. But

first of all, madam. Hi Helen. Thank you

so much. You said we need to be serious about energy and we need to be serious about climate change and someone wise once said that we need to have a serious

media in order to have a serious debate.

How might we have those debates and a serious conversation about those topics with our political class to get to the level of depth of

understanding and then also of course con consumers and the public. Thanks.

Thank you. Um and madam thank you. Um hi

thank you. You talked about optionality for this country and picking the least bad option. I wanted to ask what is that

bad option. I wanted to ask what is that exactly in a world where we've decided renewables is not the panacea batteries are insufficient the grid is limited

there's no hydro there's no geo we can assume no oil carbon or gas in this country which leaves us with nuclear and

hydrogen and with nuclear we have the nuclear financing act sure but only two large scale in the pipeline otherwise we're crossing our fingers about SMRs

And for hydrogen, we have the lowcarbon hydrogen act which theoretically helps the industry but prohibits essentially from selling hydrogen to offtakers

outside of the country which is a limitation that the inflation reduction act doesn't have. So in that context is it enough and for a cashstrapped

government what actually is the least bad option here? Thank you very much.

And sir, did the microphone I think it if you raise your hand again just to help us out. Thank you sir.

Thank you. Thank you. Could I ask what your take is on the long-term future for China? And the reason I ask is that uh a

China? And the reason I ask is that uh a fellow geopolitical commentator Peter Zion, he's incredibly bearish on the prospects for China. He's predicting

demographic collapse within the next decade or so and cites a series of convincing to me anyway statistics to to back that up. So I'm just wondering are those similar viewpoints that you would

share or would you be more um bullish as to uh the prospects for for China as a whole demographically?

Thank you very much sir. Um serious

media serious debates on energy and climate change issues.

I mean I think there's been an absence of that in this country.

Um, and I think that that's true at the political level and in the media. I mean, I go back to the net zero

media. I mean, I go back to the net zero moment in like 2019 and the possity of that debate about that um in the in the House of

Commons. Um I think it was quite notable

Commons. Um I think it was quite notable in 2022 um that there was uh

improvement at least on the energy side of things I think in the public debate and I noticed as somebody who'd spent

quite a bit of time in the previous few years trying to talk about energy uh in one way or another um different platforms

um that it was a lot easier in 2022.

Um, I always thought before then, oh, oh, Helen's going on about energy again.

And then I found that quite a lot of people wanted me to go on about energy in like in in in in 2022. And I think that it's notable in that respect if you

go back to the 70s where the quality of the public discussion about energy is actually pretty good and about climate change actually and about ecological

limits in general.

um is that it comes with crisis. So in that sense, the worse it

crisis. So in that sense, the worse it will get perhaps the better educated we will all um become. Um in terms of what the least

um become. Um in terms of what the least bad options are, I completely see like where you're um coming from. I mean, I

think that given where we are now, I think as much money as possible has to be thrown at the

nuclear power. Uh, and that that needs

nuclear power. Uh, and that that needs to I mean, as far as I can see, the optimistic take for the reactor that's being built is 2029. That absolutely

needs to happen rather than um being pushed back like any later than that. I

think we have to accept in the in the short to medium term um more oil and gas. Um I don't think that it makes any

gas. Um I don't think that it makes any sense to think that um we'd serve ourselves well by rapidly

closing down North Sea or accelerating the closure of North Sea when we still end up importing oil and gas from other parts of the world. And it doesn't make

it necessarily any better if it comes from somewhere nice so to speak like Norway where the macroeconomic consequences of it are concerned because um it leads to deterioration of the

balance of um payments. And so on that ground alone it's better that we use domestically produced oil and gas than

that we use imported um oil um and gas.

And I think we have to think about and have a strategy for thinking about energy across the board. And we don't need to have a renewables policy and a nuclear policy and a what are we going

to do about winding down the North Sea policy. We need a coherent joined up

policy. We need a coherent joined up energy um policy that thinks about the systemic interplay between the different components of our energy um system. And

unless until that we do that, I think we'll continue to make um not very good um decisions in terms of um

China. I mean, I think there is a

China. I mean, I think there is a paradox here. I mean, I'm certainly not

paradox here. I mean, I'm certainly not somebody who thinks that that China's heading for collapse. I I I just don't really see

collapse. I I I just don't really see that. Um I think the paradox is that

that. Um I think the paradox is that China has a set of macroeconomic difficulties, a set of geopolitical

vulnerabilities in which oil is actually central to and tied to the particular distribution of naval power in the world

and the United States ability to dominate naval routes on which China is dependent for uh its um hydrocarbons and yet at the same time

China has had this astonishing technological success over the last few years and I said there's three things

it's deepseek it's um BYD the electric vehicle company and it's space and the moon and China's bringing back materials

from the far side of the moon that the Americans have not been able to do. I

don't think it's possible to understand I don't really think it's possible to understand the elevation of mosque not just within the Trump administration and is obviously now fallen within the Trump administration

but if you like the embeddedment in the of um Musk in the American federal state without the shock of China's strengths in the space race

that's where the Mars obsession like um is coming from because in some sense they think I think that the moon has lost um to China in terms of that um

competition and how these things play out then between China's vulnerabilities and China's astonishing like strengths.

I think that's a really really hard thing to think about because as I say in other contexts in regard to China, where is the historical precedent for starting to think about this? It's it's very hard

to find one. And the reason why I think it's hard to find one is because something so fundamental if you like changed in world history when China was not the country that industrialized

first and that China got left behind in the turn to fossil fuels and now we live in the world where that era has come to an end and China joined the world of

fossil fuel energy succeeded in some areas at it phenomenally and now we're living the whole world is living in this new world that's been created by China's

economic transformation. And it becomes very

transformation. And it becomes very difficult, I think, then to use past history as any kind of guide to where the future is is going under these conditions.

Um, I'm going to pick up off the China comments if I may from a question that we've had uh in online. Uh the question says, have recent events, and I'm not quite sure what they are, but let's

include the new Trump administration, uh increased or decreased the likelihood of a military conflict between China and the US. It's a good question. I mean, one of

US. It's a good question. I mean, one of the things I think is really quite striking about Trump on China is if you

listen to him um or read his, you know, stuff on his social media um he can sound quite unhawkish on Taiwan,

significantly less so than Biden. Yeah.

Or the Biden administration perhaps you should say. um which was probably in a

should say. um which was probably in a number of ways at least the most hawkish US administration there's been since the

Taiwan act of 1979 19 um 80 and so I don't think it's difficult to see how Trump

will actually be willing to appease quite a bit from China on that score.

Now, I hesitate to say that because I think that in the context in which the geoeconomic competition

um and its AI aspects is intensifying between US and China. You can see how the Taiwan question gets bound up into that, falls into it if you like, and

becomes hard to disentangle. But I think that Trump's

disentangle. But I think that Trump's instincts are actually are to accommodate or not to go to war with China over

Taiwan. And I think you can see that

Taiwan. And I think you can see that his general preference for peace, if you like, is also being manifest um in

regard to Iran. I mean, if you go back to um the late or the period between the election and the inauguration, there was a lot of commentary. I was probably

saying some of this myself to be honest.

um that that um suggested that we might see Trump moving closer than Biden had been willing to do on working with

Israel militarily against Iran over the nuclear weapons program, but that's not been the case at all. He's gone in the opposite

um direction. So

um direction. So Trump's almost always I think more a military dove and a very strong economic hawk. Um we are running out of time. We

hawk. Um we are running out of time. We

started a little late so we're going to go a little bit later and I'm going to take a couple more questions from the audience. I see I think a a lady over

audience. I see I think a a lady over there uh with a red red top. Yes, you've

got it. That's good. And over here gentleman here in a dark top polo top here. Uh if we can get a microphone to

here. Uh if we can get a microphone to you if you keep your hand up just to thank you very much. But madam here first if you have the microphone. Yes.

Hi Helen. Um Africa as a continent hasn't come up in conversation yet. So

I'm curious if you have any thoughts on the role of Africa cognizant that uh political and economic power is defragmented across 54 nations. It is

the last frontier for oil, other natural resources, fastest growing youth population. US and UK have pulled back

population. US and UK have pulled back from foreign aid, maybe some trade versus aid and China continues to heavily extract

slashinvest in Africa.

Thank you very much. And sir, um, how do you see, uh, the UK and other economies innovating our energy production without going into a debt spiral?

Thank you. Okay. I mean, I I think that it's clearly the case that there is another version of a scramble for Africa from the point of view of the advanced

economy states plus China going on. And

if you look at the European Union's positions on critical minerals, they all involve essentially um trying to use

African resources for European benefit.

And I think that we can see already and you can see this in Latin America um as well that the assumptions that we

Europeans have that there's a hierarchy in which our resource needs are more important than poor countries including Africans resource needs are being fundamentally politically challenged.

It's not going to be like it was at the beginning of the age of hydrocarbons.

Um, in this respect, the attempts to assert some sovereignty over those resources is going to come a lot sooner than was the case with um, hydrocarbons.

And I would say um that African countries are among those countries more so in many ways than anywhere else where the expectations are that energy

consumption is going to grow um, and needs to grow. And I think one of the really difficult positions the Europeans have got into in this is

effectively saying to African um countries, we want you to do the energy transition without having first move to what we have in fossil fuel and we are

going to use we in in Europe are going to use fossil fuels as the backs stop to compensate for the difficulties of the energy transition. um they're like an

energy transition. um they're like an insurance policy and then saying we're not going to help you uh African countries develop if you want to go down

the fossil fuel like road. So I think there's a set of quite significant conflicts that are going to come out of that mismatch between the

realities of African expectations um and the hubris if you like of of European countries about African um

resources. I think that the interaction

resources. I think that the interaction of the energy and the debt situation for the UK is quite difficult um because

we've seen as I've mentioned a number of times what happened to Liz Trust's government um in terms uh of the bond markets and if you look at the scale of

the fiscal commitments that the Liz Trust's government made the tax cuts were a drop in an ocean in the ocean compared to the energy

support package that um she had or um Quasi Kuatong um had um announced. And

so if you want to do things to try to protect consumers from higher energy costs that requires spending money. If

you want to do what I said earlier um of like trying to accelerate um the nuclear um building of nuclear reactors that is also something that um

is debt laden and one thing we shouldn't forget I mean France gets lots of credit in some ways quite rightly um for the fact that it persisted with nuclear in

the way in which it did um as the cost continued to rise in the 70s ' 80s etc. But it's also got something to do with the size of the French debt um um and

the effective nationalization of the debt of of of of um EDF. And in that sense it goes back to in a way a political question that the Star

administration like the administrations before it have like wanted to dodge um as to whether we in this country can deal with our fiscal position without thinking about being able to increase

income tax. Um because we go around well

income tax. Um because we go around well we the politician or they the politicians and we the voters go around all kinds of alternatives um to try to avoid increasing the basic

rate of income tax without in any way improving our fiscal position. And if we want to address some of these questions that talking about this evening then we need to be able to spend more money. And

to be able to spend more money we need um not to have to um borrow it at the rate in which we have been um doing. We're going to have to leave it

doing. We're going to have to leave it there. Um, and I'm very sorry if you had

there. Um, and I'm very sorry if you had questions or if you sent in questions and they didn't get uh we didn't get round to it. There is only so much time.

Um, I thought this evening was challenging and informative and at times rather brutal. Um, in the best possible

rather brutal. Um, in the best possible way. Um, thanks to you Helen. It's been

way. Um, thanks to you Helen. It's been

an absolute pleasure. Thanks again to Guinness Global Investors for supporting this event. Um, it's just been a real

this event. Um, it's just been a real pleasure for the last hour and a half.

Thank you very much indeed.