Goldman Sachs’ Gutman: Election cycle creates ‘instability’

This is a hugely exciting day for us. As you may have heard, you know, we're bringing together 400 of what we think are the fastest growing um small and mediumsiz enterprises in the UK. Um we think this is a group of of of companies and entrepreneurs that exhibit all the growth that we want to see in this country, by the way, that we want to see globally. We're trying to bring them together with a bunch of really respected senior business leaders from big cap world in the UK. So we've got Ken Murphy from Tesco and Amanda Blank from Aviva and others. you will have seen the agenda and really what's the opportunity. We think that this country has done a phenomenal job at building and creating small businesses. Um the job we have and I'm sure we'll come back to this interview is to help those companies scale from where they are. And so what we really want to do today >> is focus on the fact that these companies don't lack ambition. They've got huge ambition. You'll hear that today. All our surveys suggest they want to grow. They want to take risk. They want to allocate capital. what they need help from from all of us from the business community from policy makers you know is to is to take these small companies and scale them and you know this because you're seeing it in the broader business community everything right now is about scale >> you have a brilliant window crisscrossing the Atlantic the whole time as well and I heard a little bit this from Asah Pompei earlier on your colleague as well but look is the problem well the problem isn't with the entrepreneurs they're amazing young men and women or older men and women who are able to have great ideas, take risks as well. What institutionally is wrong with this country and Europe? >> Yeah, I mean look, I would I would take just generally a slightly less negative stance. I mean, we are optimistic. Um, >> why are we grow in the US compared to Europe at the moment, Anthony? >> Yeah, it's it's on a relative basis. You the US is exhibiting greater growth, but we see the opportunity here and and I'll give you a couple of reasons why, which isn't to be naive about some of the challenges, but >> we still think this country has three or four big things going for it. Um, as does Europe. It's we've got world-class universities um by any measure we've got that by the way linked to that we've got a AI hub in the UK which is creating these extraordinary individuals like Dennis Sarabis which is something that we've got to continue to cultivate it's critical to this entrepreneurial group we've got here >> by the way we also have an incredible life sciences cluster I mean you've spent time on this London Oxford Cambridge corridor >> absolutely >> we're creating more life sciences businesses and attracting more venture capital than the entire sum of Europe together and By the way, forgive me, but we also have a world-class financial services sector here which is creating, you know, 8 to 9% contribution around free street. I'm told >> with well that's one hub for sure. >> Um and you know roughly one and a half two million people employed in the center. So I suppose all I'm saying is we think that there is a lot of opportunity here. Is there more to do? What do we need? For sure. >> So when you speak to Ken and Mando and I'm enormous fans of both of them as well. They are brilliant, brilliant business leaders as well and you're, you know, we we're all lucky to hear them speak later today as well. What can they do for those small businesses? >> Well, they can do a few things. Firstly, they continue to do what they do because the best thing for small business leaders is to see aspirational big business leaders and you know, I think Ken, Amanda, Caroline are all shining a light on what the opportunity is. All companies start small and they have to grow. So, that's the first thing. You know, I think the second thing is we need to continue to help these companies scale by um explaining to them how they can allocate capital, how they can [music] deploy capital, how they can attract capital, how they can take risks. >> Yeah. Allocate, deploy capital, but get capital is the big problem here in Europe. And and I'll say here in Europe, UK and Europe, I'll lump it together. You know as well as I do that it's been an ignominious failure to get CMU up and running. You and I both know full well it was the middle of the last decade that John Hill was trying to get this done. We left Europe and it got stored forever. Now there's a version which is a savings investments union but it's still too slow. Anthony, why is Europe so in the slow lane and the UK as well on on actually getting the capital available to these brilliant people? >> Yeah, I mean look I again I think when you step back and you look at where the capital is coming from, we are seeing still extraordinary amounts of venture capital and private equity capital flowing through. But what is required to accelerate it to your point? What's required to accelerate it? Two or three things. First and foremost, we need a stable policy backdrop. We need credible, sustainable economic policy. You're >> saying that with a glint in your eye, cuz I'm trying to work out. Can we name every prime minister since Brexit, Anthony, the two of us? Now, >> look, here you go. Here's >> how many chancers. Here is here is the challenge, right? You've just said this morning on CNBC that Sanchez is potentially going to call election. >> And I'm desperately looking at the flashes to talk in the meantime. We have a we have an election cycle that creates a degree of instability across Europe. We all know that that's not a just a European issue. It's a global issue. First and foremost, what do all businesses need big and small? They need a sense of stability and policy certainty and and from that you get good visibility on where you're going to drive your business and your business plan. So that's what we need by the way that's exactly what we need in the UK. And if we can get that, then I think, as I said before, we've got the foundations for these entrepreneurs that we're bringing here together in this building to grow. But that's critical. >> And and and I always think if they can do what they do with the backdrop of European politics, and they are brilliant, brilliant businessmen and women as well. Look, I want to ask you about some of the bigger issues as well, if I may, as well. What's going on in the bond markets as well? Um, what what do you see as the major issue in the bond markets? We can talk about crowding out. We can talk about inflationary pressures as well. I can't help thinking it's about leaders uh who have basically let the deficit get out of control. >> Yeah, look, we, you know, we're watching this very closely. We've clearly got rising yields across the world. This is not a European issue. It's a global issue. Certainly in the Western world. You've seen it with treasuries. You've seen it in France most recently in the last few days. You know, we all know what's driving it. We're focused on, you know, you know, energy costs. We're focused on the labor market. But fundamentally, what do we need to solve this problem? We need lower fiscal deficits and we need need more durable economic growth. And ideally, we need some combination of both. And so there are trade-offs here. There are always trade-offs. The fiscal backdrop now makes it more challenging to address those. But what I hope we're going to see, which would give us all some comfort on that, is that combination of uh you know, of lower spending and and higher growth. >> But again, look, this announcement, this is fresh off the wire, so you get to talk about it within seconds of it happening. >> Thank you for that. And then you'd like that. Your team's looking forward to this as well. I am calling an early election. This is Pedro Sanchez as well. Uh the election will be held on November the 29th. So once again, we've got another two months where the one of the third, if not the fourth most important economy in the Euro zone is on hold for another couple of months. And then if we get a new election, it's going to be months of hand ringing to get a a group together who can rule as well. And then we may get a policy at the end of it. This is just getting worse, isn't it? What's your reaction to that? The thection >> My first reaction is we're here with these 400 entrepreneurs. We want optimism from you today, Steve. But that to one side, look, we the market has known that we're heading into an election cycle in Europe um next year. You know, we've got Italy, we've got France, we've got Spain, we may even have one here. We'll see. And so, it's not a big surprise that we've got that. It's a surprise that it's accelerated. What's critical for us, you know, we don't make political predictions, but what's critical for us is we get this resolved quickly and we get stability. The bond markets, the equity markets, small business leaders here, they all need that sense of certainty and stability and that is what's going to cultivate the growth that we need. >> Yeah. Um, a little bit about the business if I may quickly. You are, you know, obviously the co-head of investment banking as well. Um, I'm seeing some beginnings rumblings of negative headlines about IPOs and IPO performances. If you take out the SKH Highex, you take out the SpaceX and the amount of deal making going on. Are we slowing down dramatically in this quarter, Anthony? >> No, I wouldn't say we're slowing down dramatically. I think there's been a natural pause as a function of some of the geopolitics, the rising bond yield, some of the other elements of the market cycle that we've seen in the last few weeks. I think that's perfectly natural. Feels to us like it's much more of a pause than anything more substantive than that. And I would say when we step back and we look at the business performance through the course of the year, we've seen extraordinary volumes by the way, both in the IPO markets and in the M&A markets and all of our lead indicators, our pipeline, our backlog suggest that is going to continue through to the end of the year and beyond. >> Are you worried about AI valuations? >> No, we're not worried about AI valuations. We're super optimistic about the opportunity that AI presents over the long term. We've said consistently that we don't think it will be a straight line. We've said consistently that we be need to be careful about some of the excesses that you see in capital deployment. But you know overall our view is that this is an industrial revolution that's going to drive significant growth and the valuations are kind of consistent with that recognizing as I said that it won't be a straight