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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: dot Com, the radio, plus Globo Lab and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters

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Speaker 1: on Catherine Cowlerie. The stock market is on track for

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Speaker 1: its best week in nine months, gaining for a fourth

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Speaker 1: straight session, although it has started fluctuating between gains and

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Speaker 1: losses in a narrow range. There's optimism about the US

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Speaker 1: economy and about signals from central banks that they'll continue

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Speaker 1: to stave off fallout from Britain's decision to leave the

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Speaker 1: European Union. Since the selling ended Monday. Industrial energy and

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Speaker 1: financial shares have led the rebound, and we check the

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Speaker 1: markets every fifteen minutes throughout the trading day on Bloomberg Radio.

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Speaker 1: DOWL Industrial average currently got four points trading at seventeen thousand,

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Speaker 1: nine hundred thirty three S and P five hundred is

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Speaker 1: up nearly one point, trading at two thousand ninety nine.

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Speaker 1: NaSTA Chaire by nine points a native a percent at

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Speaker 1: forty fifty one West Texas Center Media. Crude oil up

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Speaker 1: sixty seven cents of barrel one point four to forty

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Speaker 1: nine dollars. Even it's about gold up eighteen dollars announced

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Speaker 1: at thirteen thirty nine and a tenure treasury is up

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Speaker 1: seven thirty seconds with the yield of one point four

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Speaker 1: four percent. And that's a Bloomberg business flash. You're listening

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Speaker 1: to taking stock with pim Box and kapoleen As on

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Speaker 1: Bloomberg Radio. Brexit means brexit. Apparently it does not matter

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Speaker 1: who is the next Prime Minister of the UK A

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Speaker 1: Boris Johnson's dramatic withdrawal from the Conservative leadership race that

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Speaker 1: he one time was favored to win. Uh, many pundents say,

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Speaker 1: make it all the likelier that there is no turning

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Speaker 1: back now, no way to say, well, we voted to

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Speaker 1: leave it, we kind of like to stay. So let's

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Speaker 1: figure out how to do that. The UK will be

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Speaker 1: leaving the European Unions. So now the very important work

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Speaker 1: begins of determining what it means for businesses, what it

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Speaker 1: means for the UK economy, and of course, uh, those

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Speaker 1: who trade with them joining us now. As someone who

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Speaker 1: has been very close to this question for many years,

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Speaker 1: Andy Hood is Senior Director of International Trade and Government

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Speaker 1: Regulation at Deckert l l P. He's a bear stor

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Speaker 1: at law. He's also a former legal advisor to UK

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Speaker 1: Prime Minister David Cameron. So Andy, first of all, welcome

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Speaker 1: to the show. It's great to have you on today.

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Speaker 1: Thank you, it's great to be here. Well, let's, I

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Speaker 1: guess start with the sort of the nuts and bolts

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Speaker 1: of this um. What's going to happen next? What kind

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Speaker 1: of questions are you getting at Deckert from clients about

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Speaker 1: where do they begin? Do they wait till the exit

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Speaker 1: actually happens? They have to sit and watch the headlines

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Speaker 1: on what's happening in Brussels? What are you telling them? Well,

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Speaker 1: it's say, it's a good question. There's a lot of

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Speaker 1: uncertainty at the moment here in the UK, and I

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Speaker 1: think frankly and more broadly across the content of Europe

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Speaker 1: there's a lot of political, economic, and legal uncertainty. So

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Speaker 1: what we try to do is is help the navigate

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Speaker 1: and minimize as much uncertainty as possible and to think

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Speaker 1: through what the options are all them. And like you

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Speaker 1: say that, the questions we get now are where are

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Speaker 1: we and where are we going? I mean the short

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Speaker 1: answers to where we are? As you said at the

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Speaker 1: beginning of this, we've got a prime ministerial election coming

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Speaker 1: up effectively with the Conservative Party and all five leaders

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Speaker 1: have said they will honor the decision of the UK

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Speaker 1: public on the twenty three June to leave the EU,

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Speaker 1: and that's what we can expect to see is their

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Speaker 1: policy going forward. Um. But beyond that, the processes is

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Speaker 1: still far from certain. There was a there the processes

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Speaker 1: set down in the treaties that we know about, and

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Speaker 1: we can that's our starting point there. Well, let's start

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Speaker 1: with that. But I guess it's interesting because I'm assuming

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Speaker 1: that when the treaties were made that people really weren't

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Speaker 1: thinking constant, you know, they weren't focused too much on

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Speaker 1: what happens if someone leaves. I mean, this was an

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Speaker 1: historic moment, right, EU, European Union, you know, coming out

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Speaker 1: of two world wars and all this. Right, so what

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Speaker 1: what what is the what is the first legal step?

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Speaker 1: Again not really tested so far. Yeah, you're absolutely right,

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Speaker 1: it was. I mean, it was put into the treaties,

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Speaker 1: so it is foreseen for some extent. But actually I

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Speaker 1: won't get to too technical and too legal, but for

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Speaker 1: the Anaraxts amongst us, the treaty provisions that talk about

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Speaker 1: the withdrawal don't really sort of take us through what

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Speaker 1: the consequences are if we if agreement isn't really reach

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Speaker 1: So you're right, I don't think it's something that anyone

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Speaker 1: ever expected. And this is a pretty unique circumstance and

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Speaker 1: it's all uncharted territory for arsks, lawyers and for businesses

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Speaker 1: out there. So but what is the process that we

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Speaker 1: do know? It's governed by what's called Article ficity of

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Speaker 1: the European Union Treaties, and that really sets the tone

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Speaker 1: of how the countries will go about and negotiating the

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Speaker 1: withdrawal of a particular member state, in this case the UK.

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Speaker 1: Um It says that it's for the UK to decide

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Speaker 1: when it wants to launch that process, and we've had

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Speaker 1: a lot of discussion about when that would be, but

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Speaker 1: I think it's looking pretty settled that it won't be

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Speaker 1: before the leadership election, and maybe sometime after that in fact,

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Speaker 1: and once they've launched it, they've got up to two

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Speaker 1: years to negotiate that process. It could be done sooner,

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Speaker 1: or it could be done over a longer period if

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Speaker 1: all signs agree, but the two year benchmark is the

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Speaker 1: one that most people are looking at in order to

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Speaker 1: reach an agreement just to withdrawal. So that just deals

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Speaker 1: with UK leading and how we can tie up those

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Speaker 1: new ends. It doesn't deal with that that new relationship

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Speaker 1: would look like. So does the all the old treaties

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Speaker 1: and all the old trade relationships hold until these negotiations

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Speaker 1: are complete. Exactly, So at the moment, the vision of

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Speaker 1: the legal position of the UK is it's a member

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Speaker 1: of the EU, it's bound by all the treaties, and

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Speaker 1: it's also a party to all the trade treaties that

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Speaker 1: the EU have with other countries. Um. So all that

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Speaker 1: carries on as normal for now. Of course, to those

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Speaker 1: who are looking at this issue closely, and for some

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Speaker 1: large industries and large businesses, they're particularly interested about the

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Speaker 1: legislation that's going through at the moment. Now the UK

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Speaker 1: remains on the negotiating table, but its influence has been

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Speaker 1: dramatically reduced as a result of the vote in on

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Speaker 1: the twenty three June. So by the UK was normally

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Speaker 1: very strongly in terms of pushing for free trade agreements

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Speaker 1: or liberalization or deregulation. The voice of the UK there

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Speaker 1: is much as much diministered around the table. And yet

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Speaker 1: so many economists and attorneys and Others have pointed out

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Speaker 1: that the EU depends a lot on the UK in

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Speaker 1: terms of selling its goods and services. We had a

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Speaker 1: member of the EU Parliament on from Ireland and she

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Speaker 1: was saying that for Ireland this is certainly the case.

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Speaker 1: It's true for a lot of other countries. Will that

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Speaker 1: give the EU excuse me, give the UK some leverage

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Speaker 1: in our negotiations with the EU. I think a lot

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Speaker 1: of complicated negotiations ahead. I've said before with Bloomberg that

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Speaker 1: I done trade negotiations and international negotiations for twelve years

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Speaker 1: now and I can't imagine a more complicated negotiation We've

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Speaker 1: got UM. So yes, there is a there's going to

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Speaker 1: be a strong interest in maintaining UM a good solid

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Speaker 1: relationship with the UK, and the UK will have some

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Speaker 1: leverage on some of the some of the trading it does,

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Speaker 1: but it goes both ways for two reasons. Firstly, we

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Speaker 1: have a at the moment that a trade deficit with

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Speaker 1: the EU anyway, so it's not all in the UK's advantage.

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Speaker 1: And on services, particularly around banking and financial services, where

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Speaker 1: the UK provides an awful lot of services into the EU,

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Speaker 1: there's again strong leverage on the other side of the

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Speaker 1: argument for our EU partners in any negotiation with the UK,

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Speaker 1: so that it goes both ways, it's very much a

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Speaker 1: negotiation to be had. Andy, did did you the Cameron

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Speaker 1: have any choice but to step down? Could he, if

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Speaker 1: any way, he could have stayed on as Prime Minister

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Speaker 1: and could he then have helped this process? Well that's

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Speaker 1: a particularly tricky question, see from someone who came from

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Speaker 1: inside Number ten. But it's it seems to be very difficult.

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Speaker 1: I mean, the Prime Minister said that come what may,

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Speaker 1: he would remains Plan Minister after the vote and he

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Speaker 1: would launch the proceedings to leave the EU immediately. As

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Speaker 1: it happens, of course he's resigned immediately and he has

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Speaker 1: not launched the process to comments and those things, I

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Speaker 1: think they could plightly. I think he goes without saying so.

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Speaker 1: It would have been very difficult, having argued so strongly

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Speaker 1: for the deal that he's secured with his partners in February,

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Speaker 1: I think argued again on the basis of remaining in

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Speaker 1: the EU. To have had such a strong vote, over

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Speaker 1: a million people voting in favor of leaving him to remain,

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Speaker 1: I think would been very difficult. But obviously there's incredibly

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Speaker 1: personal and difficult to him to make, and there's those

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Speaker 1: views on both sides of the argument. I thought that

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Speaker 1: he should have stayed on longer or gone that I think.

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Speaker 1: I think we've seen the difficulties that the Tory Party

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Speaker 1: in particular have had in terms of discussing the EU

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Speaker 1: show over the years. Is his political cur over or

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Speaker 1: does he step back? And I'll wait to see how

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Speaker 1: this plays out there. Of course, many have warned the

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Speaker 1: w A D procession that it will be difficult, that

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Speaker 1: this may not favor the UK as much as those

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Speaker 1: who voted to leave would think. Does that mean that

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Speaker 1: David Cameron then has an opportunity to future to step

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Speaker 1: back in to the political spotlight and maybe even get

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Speaker 1: back in there to see it Ten Downing Well, I

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Speaker 1: think politicians sign it often very hard to leave the

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Speaker 1: political spotlight, but once you've been Prime minister, it's also

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Speaker 1: very difficult to step back in. And I can't conceive

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Speaker 1: that happening. And I'm sure he has a bright future

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Speaker 1: ahead of him in all manner ways that I don't

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Speaker 1: think that ten Downing Street is likely to be to

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Speaker 1: be calling him back. But as you said, there is

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Speaker 1: a lot of turmoil ahead and a lot of difficulty

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Speaker 1: that the UK may face. And you know how, any

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Speaker 1: contribution that people can make, I think is always gonna

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Speaker 1: be welcome, and he said he was certainly committed to

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Speaker 1: do that for the UK. Let's look at a specific industry,

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Speaker 1: a big one, very important for London, the City of London,

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Speaker 1: the financial services industry. What what is likely for them now? Well,

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Speaker 1: I think the financial servicensery is going to be a

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Speaker 1: big part of the negotiation of the UK's new relationship

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Speaker 1: for the EU. That whose that form it takes, we

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Speaker 1: don't know. It depends on the new leader and it

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Speaker 1: depends as you said earlier. But in any negotiation, if

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Speaker 1: if we're looking at something like a free trade agreement

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Speaker 1: to allow people to buy and sell goods and services

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Speaker 1: across the border, then the big asking carat and here

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Speaker 1: is going to be the financial services industry for the UK.

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Speaker 1: It's it's an enormous part of our our economy and

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Speaker 1: it's an enormous part frankly as the euse economy in

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Speaker 1: the financial service as world. So I think there's an

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Speaker 1: interest in finding a way through. But it will be

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Speaker 1: a big part in negotiating tool that the difficulty or

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Speaker 1: the issue that the financial services industry now has to

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Speaker 1: face is but it's said, and wait to see the

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Speaker 1: outcome of that negotiation, or does it start making plans

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Speaker 1: to restructure itself in a way that um that allows

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Speaker 1: it to set up in other parts of the EU.

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Speaker 1: And I know that they are thinking throughout at the moment,

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Speaker 1: and I hope you'll join us again as we're just

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Speaker 1: at the beginning of what's going to be long process

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Speaker 1: and your your perspective today. Most appreciated, Senior Director and

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Speaker 1: barrister at law at Deckert LLP in London, Former legal

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Speaker 1: advisor to UK Prime Minister David Cameron. This is Bloomberg