Speaker 1: The Brexit vote coverage on Bloomberg Radio. So as Charlie
Speaker 1: Apologist so ably reported, it does look like the vote
Speaker 1: to Remain in the EU has edged out Breggs that
Speaker 1: we will not know for hours, but this is the latest.
Speaker 1: And when you have Nigel Farage, who has been such
Speaker 1: allowed and important voice urging voters to say no to
Speaker 1: the EU, if he says it looks like Remain has won,
Speaker 1: it seems like a very powerful indicator to all of
Speaker 1: us who are listening and watching. So if the EU
Speaker 1: is not going to see the exit of the UK,
Speaker 1: what does it mean for the global economy? What does
Speaker 1: it mean for the US economy? And in fact, what
Speaker 1: does it mean for global central banks. We're gonna put
Speaker 1: all this to Bill Pool. He is a former president
Speaker 1: of the Federal Reserve Bank of St. Louis, senior fellow
Speaker 1: at the Cato Institute. Joining us now, Bill, welcome back,
Speaker 1: Thank you, Kathleen. So what's your immediate reaction to this
Speaker 1: or my reaction is? Uh, First of all, it looks
Speaker 1: like Remain winds. I follow the betting odds and they
Speaker 1: have now gone to twelve to one for Remain. Uh.
Speaker 1: You mentioned it looks like it's going to be a
Speaker 1: fifty two split. Percentage wise, it's a fairly healthy margin.
Speaker 1: I think it's good that it's not just eking out
Speaker 1: a bear a bear wind. It appears that the UH.
Speaker 1: One of the results is going to be that the
Speaker 1: the EU is going to have to respond to the
Speaker 1: fervor with which the Leave campaign proceeded in the UK.
Speaker 1: A lot of people in the UK are set up
Speaker 1: with the regulatory burden that comes from the EU. UH.
Speaker 1: It's important to understand that the EU has UH used
Speaker 1: this very nice sounding word, they want to harmonize regulations,
Speaker 1: but a lot of what that is about is that
Speaker 1: the French want to saddle other countries with the same
Speaker 1: unsatisfactory labor market rules. For example, the Hollan government and France,
Speaker 1: elected as a socialist government, has been backtracking to a
Speaker 1: degree that backtracking has led to labor disputes in France,
Speaker 1: been some strikes recently. So I think there's going to
Speaker 1: be should be some soul searching here and the UK
Speaker 1: needs to come forward with a very positive program of
Speaker 1: reform for the U. For the EU, it's becoming a scleric.
Speaker 1: Growth rates are low, unemployment hangs high, and most of
Speaker 1: the EU reforms are really needed, and that's what the
Speaker 1: UH leave people. UH, we're saying that we're fed up
Speaker 1: with this bill Pool. I wondered if you could talk
Speaker 1: a little bit about demographics, not only when it comes
Speaker 1: to the United Kingdom, but to the European Union at large,
Speaker 1: because as part of the U govn whole results, they
Speaker 1: are saying that people under the age of twenty four,
Speaker 1: we're three to one for remaining in the European Union,
Speaker 1: while those over the age of fifty voted to leave.
Speaker 1: That's not going to change after the results are in
Speaker 1: tomorrow morning, is it. No, that's not going to change. Um. Actually,
Speaker 1: because as the older people are gradually dying off the
Speaker 1: fraction of the population that remembers and was governed by
Speaker 1: the UK before it joined the EU. UH, that population
Speaker 1: is declining, UH as people age and die. So I
Speaker 1: would guess that the allegiance to the EU among the
Speaker 1: voting public in the UK will rise, but that's not
Speaker 1: going to satisfy a lot of the underlying concerns. And
Speaker 1: I would guess also that as the younger people UH
Speaker 1: achieve more responsibility various places in their career. UH. For
Speaker 1: actually senior positions in businesses large and small. They will
Speaker 1: see the burden that is imposed by the EU and
Speaker 1: they will uh gravitate towards an appreciation of what the
Speaker 1: leaf position was all about. So we'll see how that
Speaker 1: plays that. I just have to ask you, Bill uh,
Speaker 1: Janet Yellen, Fed chair. Actually other central bankheads have said
Speaker 1: they're really waiting to see what happens with the breggsit vote.
Speaker 1: Looks like the Braviin vote maybe prevailing at the very least.
Speaker 1: Do we say, now, well, Janet Yellen, you said you
Speaker 1: better watch out because it might buy financial market volatility
Speaker 1: that could tighten financial conditions, hold off on an interest
Speaker 1: rate increase, and said she was very specific. It had
Speaker 1: a big influence at the last meeting. Is opened the
Speaker 1: door wider to a rate hike for Janet Yellen and
Speaker 1: the Fed. I suppose. But one of the things that's
Speaker 1: rather surprising about this look, when was this election scheduled
Speaker 1: over a year ago, wasn't it? So why is it
Speaker 1: just now the Janet Yelle on feder Reserve is becoming
Speaker 1: concerned and using that as a reason to um delay
Speaker 1: consideration of a rate hike. Uh. It seems to me
Speaker 1: that's uncertainty has been out there for at least a year.
Speaker 1: It's getting We've gotten closer to it. Isn't the Fed
Speaker 1: supposed to look ahead? Well? I think maybe they're worried
Speaker 1: about the financial market impact and being more because I
Speaker 1: don't think people took it seriously that would happen, And
Speaker 1: when they did, for a while the FED said, WHOA,
Speaker 1: that's maybe the horse of a different color. The polling
Speaker 1: results and the betting results have for quite some months
Speaker 1: indicated that leave was a had had some probability put
Speaker 1: on it. That's not a recent development. That didn't just happen.
Speaker 1: Bill pull Just to inform you, the unemployment rate in
Speaker 1: the United Kingdom right now is about five five percent,
Speaker 1: and the pound sterling is strengthening against the euro, up
Speaker 1: more than half a percent of more than eight tenths
Speaker 1: of a percent against the US dollar. UH the en weakening,
Speaker 1: the Swiss frank weakening. Will any of this change? Mark
Speaker 1: Karney ahead of the Bank of England's position on interest rates.
Speaker 1: There was an interesting chart I think it was in
Speaker 1: the Wall Street Journal this morning showing per capita GDP
Speaker 1: in the UK relative to UH some I guess it's
Speaker 1: France in Germany and the UK has been pulling out ahead.
Speaker 1: The UK has been pulling out ahead. The economy has
Speaker 1: been performing better. That's not to say that it's great,
Speaker 1: but it has been performing better. And I think that
Speaker 1: if if this UH, if this leave campaign leads to
Speaker 1: leaves the UK to promote more structural reform, more pro market,
Speaker 1: pro growth reform, that's going to speed up growth and
Speaker 1: it will justify require indeed, interest rate increases and UH
Speaker 1: forthcoming incoming quarters. Now. Of course, a lot of people
Speaker 1: talked about Mark Arney. Mark Arne, excuse me us, the
Speaker 1: governor of Head the Bank of England, has been pounding
Speaker 1: the table about how damage has already done to the
Speaker 1: UK economy. UH Is that insufficient to slow down an
Speaker 1: interest rate increase for the BOE the Bank of England.
Speaker 1: The damage already done? I think that's pretty small. There's
Speaker 1: been some uncertainty. I don't see any evidence of huge disruption, um,
Speaker 1: you know, significant investment projects on hold, etcetera, etcetera. I
Speaker 1: think that he's probably overstating damage already done and that
Speaker 1: will disappear from the equation pretty quickly. Thank you very
Speaker 1: much for joining us. Bill Pool is former president of
Speaker 1: the Federal Reserve Bank of St. Louis. He is a
Speaker 1: senior Fellow at the Cato Institute. Continuing coverage right here
Speaker 1: on Bloomberg on the Brexit boat. The polls are closed
Speaker 1: in the United Kingdom to determine whether the country will
Speaker 1: remain in the European Union or will leave. This is
Speaker 1: Bloomberg Radio