Hello from The National and welcome to the View from London – your weekly guide to the big stories from our London bureau
Burnham bonds
An exclusive sit down with Mervyn King, who knows a global meltdown when he sees one and worries about the Iran war: we don't yet know how this Middle Eastern situation will be resolved, or the timescale for it.
The now Lord King has warned Andy Burnham and other UK prime ministerial contenders that they cannot go around the financial markets to boost spending.
Speaking to The National's Inside Brief, the former governor of the Bank of England, who was in charge during the 2008 financial crisis, responded to Mr Burnham's suggestion that the country's leadership should not be “in hock” to the bond market. A political crisis for Prime Minister Keir Starmer less than two years after taking power has led to Mr Burnham's bid to return to parliament in the hope of taking the top role.
“What the bond markets want is an economically credible path for policy which is politically supported,” Mr King said. “If there is any change, the potential successors to the current team will have to be very clear about what their economic programme [involves].”
With the spillover from the Iran war set to boost inflation and lift interest rates, the UK gilt market has seen the government pay more for its debt.
Now approved to run as the Labour candidate in the Makerfield by-election, Mr Burnham has poured oil on troubled markets: “Let me say this really clearly, I support the fiscal rules, there needs to be a plan to get debt down.”
Mr King cast doubt on whether or not the “in hock” jibe could again be uttered by the former Labour cabinet minister-turned-mayor of Greater Manchester.
“If he were to become Prime Minister, he would not be repeating that comment.”
Terminal six?
Confirming he had met with Heathrow Airport chairman Philip Jansen, Surinder Arora has one stipulation for the two sides coming together to build a new third runway at the UK's international hub.
Mr Jansen took on the job at the start of the year. His previous role was at BT, where he had a reputation for being an investor and a customer-facing boss. Mr Arora, the rival outsider looking for take-off for his challenger scheme, wants Heathrow Airport to recognise its plan for a 3.5km runway built over a major ring road is unworkable.
"When I was asked by the chair of Heathrow Airport all I said was 'very happy to work with you, not an issue,'" he revealed. "The only thing I made crystal clear, we have to introduce competition."
A hotel tycoon known for his attention to detail, Mr Arora has provided airline and traveller accommodation around the airport for decades.
His quest to build the third runway was seemingly set back last year when the government picked Heathrow Airport as the preferred option. Now he is back with a new proposal.
The basis of the new bid is that the existing option will fall into the trap of the UK picking a gold plated scheme that is delayed and goes over budget. "This is a scheme that cannot be delivered until the earliest 2040 or beyond."
The Indian-born entrepreneur hopes the government has a change of heart after the CAA regulator started a new consultation that would allow rival structures at the facilities. "I love the country," he told The National. "I think as a nation we need the growth, we need expansion, and if we don't, we'll end up losing to other countries in Europe and the rest, but more importantly, we need to be competitive, and that's where we come in."
The first-phase 2.4km runway avoids moving the M25 and other high-risk infrastructure work needed to build to 3.5km. A new sixth terminal would be built as well.
GCC fillip
It could not be more timely but the UK and GCC are poised for finalisation of a free trade agreement, worth a bump of 0.11 per cent to GDP annually. “The signing of the FTA comes after a series of intensive rounds of negotiations,” GCC secretary-general Jasem Mohamed Albudaiwi said on Tuesday.
The move is timely after experts said the era of cheap food should be regarded as over. Food prices could rise by more than 10 per cent once disruption linked to the Strait of Hormuz “works its way through” supply chains.
The Bank of England has separately warned that rising energy costs are likely to intensify inflationary pressures, particularly in food.
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