WEBVTT - Surveillance: May Vote Was A Distraction, Mills Says 0:00:00.080 --> 0:00:12.640 Ye, Welcome to the Bloomberg Surveillance Podcast and I'm Tom 0:00:12.720 --> 0:00:15.720 Keane jay Ley. We bring you insight from the best 0:00:15.800 --> 0:00:21.240 in economics, finance, investment and international relations. Find Bloomberg Surveillance 0:00:21.280 --> 0:00:25.720 on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course 0:00:26.079 --> 0:00:29.440 on the Bloomberg Johnny is now is she on WA 0:00:29.680 --> 0:00:32.720 Labor Member of Parliament and Shadow Minister for the Department 0:00:32.760 --> 0:00:35.760 of Business, Energy and Industrial Strategy. So thank you so 0:00:35.840 --> 0:00:39.080 much for joining us. First of all, we'll Labor support 0:00:39.280 --> 0:00:42.040 this deal if if it's I guess you know, if 0:00:42.040 --> 0:00:44.440 the voters in January we're two months from from kind 0:00:44.440 --> 0:00:48.200 of crash out. Is a prime minister playing with time. 0:00:48.640 --> 0:00:51.720 The part minister is definitely playing with time for the 0:00:51.960 --> 0:00:55.440 for the benefit of her internal party politics. As we've 0:00:55.480 --> 0:00:58.880 seen last night, we are moving toward we're only fourteen 0:00:58.960 --> 0:01:02.720 weeks away and possibly crushing out of the European Union, 0:01:02.880 --> 0:01:05.720 and no deal Brexit is not acceptable to a cross 0:01:05.760 --> 0:01:09.160 parliament of title to our country. So Labor has actually 0:01:09.200 --> 0:01:11.880 been quite clear about what our tests are. We have 0:01:12.000 --> 0:01:15.600 six tests. The current deal that goes so far from 0:01:15.680 --> 0:01:17.720 meeting that if she can, she said that was the 0:01:17.720 --> 0:01:20.039 only deal on the table now apparently she thinks she 0:01:20.040 --> 0:01:22.800 can re negotiate one. If she I don't think it's possible. 0:01:22.880 --> 0:01:25.480 If she can re negotiate one that meets our six tests, 0:01:25.680 --> 0:01:27.679 then we will support it. But do you really think 0:01:27.680 --> 0:01:30.160 she's playing from within her party now, because now she 0:01:30.160 --> 0:01:33.080 she placated that cool, she's in charge for the next 0:01:33.080 --> 0:01:36.000 twelve But she got through a hundred and yes she is. 0:01:36.040 --> 0:01:40.080 But the hundred and seventeen, most of the most of 0:01:40.120 --> 0:01:42.400 the backbenches in her part, those who aren't paid by 0:01:42.400 --> 0:01:45.440 the party to deal, they many of them, in fact, 0:01:45.440 --> 0:01:48.120 will vote toget and May. Some of those who voted 0:01:48.160 --> 0:01:50.480 for to raise and May will vote against the deal 0:01:50.520 --> 0:01:53.440 as well. Because she is she has there's a fundamental 0:01:53.560 --> 0:01:57.640 fracture in the Conservative Party between those who want no 0:01:57.800 --> 0:02:02.240 kind of customs union, no kind of customs hard Brexit 0:02:02.280 --> 0:02:04.280 as they call it, and those many of them who 0:02:04.280 --> 0:02:08.040 want continued economic engagement in integration with the Open Union, 0:02:08.080 --> 0:02:11.320 because that's where a lot of our economy is supported by. 0:02:11.600 --> 0:02:16.000 So that fundamental like break in that party cannot be 0:02:16.040 --> 0:02:18.679 papered over in a couple of weeks. As the Prime 0:02:18.680 --> 0:02:21.440 Minister stronger now than she was three days ago, I 0:02:21.440 --> 0:02:23.640 think the Prime minute and personally, you know, I don't 0:02:23.840 --> 0:02:27.000 whoever was needing the Conservative Party, it wouldn't make that 0:02:27.120 --> 0:02:29.760 much difference because of these fundamental fractures. But I don't 0:02:29.800 --> 0:02:32.120 think she's any stronger than than she was. She has 0:02:32.320 --> 0:02:36.239 has shown that the significant hundred seventeen of her own 0:02:36.280 --> 0:02:40.280 members voted against her can't challenge her again. They can't 0:02:40.360 --> 0:02:42.560 challenge her. But remember she has to get a deal 0:02:42.639 --> 0:02:49.880 through Parliament's right. It's labor and dup and and all 0:02:49.919 --> 0:02:55.280 of you guys we supported. But this is the this 0:02:55.400 --> 0:02:59.720 is definitely the Prime Minister's with real fundamental flaws because 0:02:59.760 --> 0:03:02.640 it doesn't it doesn't say that we have a permanent 0:03:02.680 --> 0:03:06.400 customs union, which means that Northern Ireland, Northern Island have 0:03:06.440 --> 0:03:10.040 been a different position to the rest for the United Kingdom. 0:03:10.160 --> 0:03:12.960 And that is just unacceptable in so many ways. And 0:03:12.960 --> 0:03:15.360 it also, and this is really important for us and labor, 0:03:15.520 --> 0:03:19.840 it doesn't guarantee continued workers rights and environmental protections. You know, 0:03:19.880 --> 0:03:22.280 we love our landscape, we love our country side. We 0:03:22.320 --> 0:03:24.600 want to and we you know, we want to avoid 0:03:25.200 --> 0:03:29.239 litigate climate change. So these are fundamental problems with what 0:03:29.400 --> 0:03:31.080 she's proposing and that's not going to change in the 0:03:31.080 --> 0:03:33.880 next two weeks. I'd say there is there appetite in 0:03:33.919 --> 0:03:36.400 the House of Commons for a second referendum. Is there 0:03:36.440 --> 0:03:40.040 appetite in the House of Commons for fresh elections. There's 0:03:40.200 --> 0:03:43.440 certainly appetite for first elections. And I'm sitting here with 0:03:43.560 --> 0:03:48.000 you as an official spokesperson for the Official Majesty's official opposition, 0:03:48.160 --> 0:03:50.160 and we want a general election because you know what, 0:03:50.280 --> 0:03:52.960 actually enough I mean enough to push it through Parliament 0:03:53.080 --> 0:03:55.560 is what I'm trying to do, what we gauge right now. 0:03:55.680 --> 0:03:58.600 And obviously it's the DUP, the you know, the organized 0:03:58.720 --> 0:04:01.440 MPs who are keeping this government in power, and they 0:04:01.480 --> 0:04:04.120 have said that they won't vote, they won't vote for 0:04:04.160 --> 0:04:06.440 a vote of no confidence, they won't vote against the 0:04:06.440 --> 0:04:09.440 Prime Minister in a vote of no confidence, which means 0:04:09.520 --> 0:04:11.880 that they would affect probably means that they would that 0:04:11.920 --> 0:04:15.680 would win want But there's huge there's huge discontent in Parliament, 0:04:15.680 --> 0:04:18.159 not just in the Labor Party, you know, but also 0:04:18.240 --> 0:04:21.160 on their benches. And we just remember that we're talking 0:04:21.160 --> 0:04:23.760 about Brexit here, but in the country, you know, in 0:04:23.839 --> 0:04:26.120 my constituency, what people are talking about is that they 0:04:26.120 --> 0:04:28.279 haven't not a wage rise in ten years. But they're 0:04:28.279 --> 0:04:30.800 talking about is that, you know, public services were in 0:04:30.800 --> 0:04:34.680 the wh're having a winter, winter health crisis, NHS crisis, 0:04:34.760 --> 0:04:37.839 you know already, the policing, you know, crime is rising. 0:04:38.000 --> 0:04:40.160 That's what people are talking about. It only it's a 0:04:40.160 --> 0:04:42.320 general election that can change that, and that's why there 0:04:42.400 --> 0:04:45.280 is real appetite for general action. But the numbers mean 0:04:45.560 --> 0:04:47.400 that we can't be you know, we want to make 0:04:47.440 --> 0:04:48.840 sure we want to push for that when they have 0:04:48.880 --> 0:04:52.080 a chance of success is in a general election. Another distraction. 0:04:52.200 --> 0:04:55.080 If you vote for this deal, whether you're convinced or not, 0:04:55.240 --> 0:04:57.479 then you can actually get back to fixing the country, 0:04:57.520 --> 0:04:59.599 fixing the NHS and dealing with the real things that 0:04:59.640 --> 0:05:02.039 are in into the common people make a really good 0:05:02.040 --> 0:05:05.080 point about, you know that that that we we don't 0:05:05.080 --> 0:05:07.920 want to spend the next five years talking about Brexit. 0:05:08.080 --> 0:05:10.040 But the fact is that the dealer's on the table 0:05:10.080 --> 0:05:13.279 now will make my constituents worse off, you know, and 0:05:13.320 --> 0:05:17.200 across the country we've seen that. The government's own analysis 0:05:17.440 --> 0:05:20.000 says that GDP will be less than it would have 0:05:20.080 --> 0:05:22.400 been with the kind of deal that we want. So 0:05:22.480 --> 0:05:24.719 how are we going to go about fixing the NHS 0:05:25.040 --> 0:05:27.680 or the other challenges when we have a deal which 0:05:27.720 --> 0:05:30.000 is making us poorer and that for example, you know 0:05:30.120 --> 0:05:33.040 the Northeast where I come from, we have Nissan making 0:05:33.160 --> 0:05:36.599 you know, fantastic cars. It has an integrated supply change 0:05:36.800 --> 0:05:39.560 it needs to have, it needs frictionalist trade. If we 0:05:39.640 --> 0:05:43.000 see a general election, it should labor, you know, build 0:05:43.000 --> 0:05:45.080 a platform saying actually, you know, we want to go 0:05:45.160 --> 0:05:47.599 back to what it was, stay in the EU for 0:05:47.720 --> 0:05:50.719 star you know, so when we you know, when we've 0:05:50.760 --> 0:05:53.719 got this is it's truly right. Well, it's a really complete. 0:05:53.760 --> 0:05:54.919 One of the things I want to make emphasis a 0:05:54.920 --> 0:05:57.120 really complex situation. You can't have simple like will do 0:05:57.160 --> 0:06:01.880 you know, simple responses and take time. But every day 0:06:01.960 --> 0:06:04.640 by day everything is changing. So I'm not going to 0:06:04.720 --> 0:06:07.440 say to you now what I'm sorry, I'm not gonna say, 0:06:07.480 --> 0:06:10.040 you know what our manifesto would be when you know 0:06:10.120 --> 0:06:12.359 we've got a general election. But what's clear, you know 0:06:12.400 --> 0:06:15.000 with what we want out of a brexit, do you know, 0:06:15.120 --> 0:06:19.919 which has continued strong economic integration with the European Union 0:06:19.960 --> 0:06:22.640 and the protection for workers and environmental life, and that 0:06:22.760 --> 0:06:25.480 was what we'll be seeking to another We've got six 0:06:25.520 --> 0:06:28.640 hunch a thousand members and we will be reflecting what 0:06:28.839 --> 0:06:31.479 they want to Well. Kean war thanks so much for 0:06:31.520 --> 0:06:34.240 doing his labor. M P there of course in the 0:06:34.279 --> 0:06:39.880 House of Commons right behind and joining us, oh Andre 0:06:40.080 --> 0:06:43.080 with the Martin Center for European Studies. He is in Brussels, 0:06:43.480 --> 0:06:45.160 um oh, and we spoke to you earlier and I 0:06:45.240 --> 0:06:47.599 guess just through the morning, the Prime Minister is in 0:06:47.640 --> 0:06:52.200 Brussels and she is looking for assurances. To me, all 0:06:52.240 --> 0:06:56.080 of those assurances lead back to the Irish question. I 0:06:56.120 --> 0:07:00.040 think our listeners understand the Irish question, the history of 0:07:00.200 --> 0:07:03.680 the United Kingdom of Great Britain with Ireland and to 0:07:03.800 --> 0:07:06.919 the north Northern Ireland. But what's it mean for Europe. 0:07:07.040 --> 0:07:12.080 What is the Irish question for Brussels in Europe? Well, 0:07:12.120 --> 0:07:15.200 I think, um, I think, what what your listeners have 0:07:15.280 --> 0:07:19.240 to remember is that there's more than stake than just 0:07:19.520 --> 0:07:23.920 you know, the Republic of Ireland, Northern Irish Board, for 0:07:24.120 --> 0:07:28.920 Ireland and for the Irish question. At the European Union level, 0:07:29.280 --> 0:07:33.400 it's about how the European Commation and the European Union 0:07:33.720 --> 0:07:37.480 can show it's relevant and can show it's importance too. 0:07:37.560 --> 0:07:41.240 Smaller members it's like Ireland. So it's not just about 0:07:41.560 --> 0:07:44.680 the Irish border. The Irish border is just the issue 0:07:44.720 --> 0:07:49.480 that arose that shows that tan show the European Union 0:07:49.520 --> 0:07:53.120 how important it is for smaller members stay. It's also 0:07:53.280 --> 0:07:59.080 very very very very important highlights that for Ireland. You know, 0:07:59.160 --> 0:08:02.880 the support shown by the European Union over the last 0:08:02.960 --> 0:08:07.680 two years has fundamentally changed the dynamics in terms of 0:08:07.720 --> 0:08:12.440 how it approaches relations with London. I was thunderstruck by 0:08:12.480 --> 0:08:14.320 a couple of the articles that I read in the 0:08:14.440 --> 0:08:17.320 last few days in the Irish Times and in the 0:08:17.400 --> 0:08:21.360 London papers about the members from Northern Ireland. Of course 0:08:21.360 --> 0:08:24.920 with their leadership from Arlean's foster, she's appeared before on 0:08:25.080 --> 0:08:31.640 Bloomberg surveillance and just a tangible worry or study that 0:08:31.760 --> 0:08:36.200 we could return to the troubles. Is that feasible, Yeah, 0:08:36.240 --> 0:08:39.800 I think it's it's it's a very real worry, particularly 0:08:40.400 --> 0:08:44.640 in border communities where the border would be reinstated. If 0:08:44.679 --> 0:08:46.280 I could put if I could put it like this, 0:08:46.480 --> 0:08:50.640 for an Irish person, the reinstatement of the border north 0:08:50.679 --> 0:08:55.559 and south, it would literally be like reinstating the border, 0:08:56.040 --> 0:09:00.480 the Berlin Wall or the border between the Estonian, Latvia 0:09:00.559 --> 0:09:04.480 or any of the eastern European countries. It's just a 0:09:04.600 --> 0:09:08.560 very important symbol. The free border, or the soft border 0:09:08.600 --> 0:09:10.400 as we like to call it now. It was a 0:09:10.480 --> 0:09:13.480 symbol of peace and reconciliation. It was a symbol of 0:09:13.520 --> 0:09:18.160 how Anglo Irish relations had progressed. And really to to 0:09:18.480 --> 0:09:22.320 kind of reinstate the border would many people think, actually 0:09:22.320 --> 0:09:25.480 be several step backwards, not just not just one step. 0:09:26.160 --> 0:09:29.120 What can America and the Trump administration do? Is this 0:09:29.240 --> 0:09:32.240 so discreet and separate, we stay over on our side 0:09:32.240 --> 0:09:35.520 of the pond? Or could President Trump and as an administration, 0:09:35.840 --> 0:09:39.840 can they add value? Absolutely they can add value. I 0:09:39.840 --> 0:09:44.240 think your your listeners shouldn't forget that. One of the 0:09:44.240 --> 0:09:47.199 the one of the reasons, one of the core reasons 0:09:47.240 --> 0:09:50.120 why the peace process in Northern Ireland has has been 0:09:50.160 --> 0:09:55.080 successful was the extensive involvement of the Clinton administration during 0:09:55.120 --> 0:09:59.280 the ninety nineties. George Mitchell was the U s Special 0:09:59.320 --> 0:10:02.400 in Vy to Northern Ireland for many years, so the 0:10:02.480 --> 0:10:06.520 US could actually play a very important role. The US 0:10:06.600 --> 0:10:11.480 as many historic economic and social linkage is not just 0:10:11.559 --> 0:10:14.840 with Southern Ireland with Northern Ireland, but also of course 0:10:14.880 --> 0:10:17.840 with the UK. Andre thank you so much for the 0:10:17.840 --> 0:10:21.839 Martin Center for European Studies, greatly appreciated. Just terrific perspective 0:10:22.800 --> 0:10:29.320 this morning. Well let's talk about on all of this, 0:10:29.480 --> 0:10:32.920 and there's someone good to speak of is well, and 0:10:32.960 --> 0:10:35.959 that is John Mills. He is well. I frame him 0:10:35.960 --> 0:10:40.440 as a German rather British businessman and economists, but with 0:10:40.520 --> 0:10:45.199 j M L and currently uh someone very much involved 0:10:45.840 --> 0:10:48.960 in the idea of leave. John Mills, we are thrilled 0:10:49.000 --> 0:10:51.160 to have you with us today and we've spoken to 0:10:51.200 --> 0:10:58.520 you many times before. How did leave change yesterday? I'm 0:10:58.559 --> 0:11:01.319 not short lived to change very much yesterday. I think 0:11:01.360 --> 0:11:03.679 the road was a bit of a distraction, but it 0:11:03.800 --> 0:11:06.880 left everybody pretty well where they were before. There's still 0:11:06.960 --> 0:11:10.640 the same problems about getting the withdrawal agreement through. Nothing's 0:11:10.760 --> 0:11:14.360 changed on the difficulties around the backstop. As you say, 0:11:14.400 --> 0:11:16.960 the Prime Ministers in Brussels at the moment trying to 0:11:17.000 --> 0:11:20.760 get assurances on the back stop in Northern Ireland. But 0:11:20.800 --> 0:11:25.040 whether she'll get enough to satisfy the very large majority 0:11:25.080 --> 0:11:28.360 of MPAs in Parliament who are very concerned about the 0:11:28.440 --> 0:11:31.000 dual agreement I think remains to be seen. Gen mill 0:11:31.080 --> 0:11:33.640 is one of the great common features of your thoughts 0:11:33.679 --> 0:11:36.920 of the United Kingdom. And in speaking with Lord Skodolski 0:11:37.040 --> 0:11:41.720 the other day, is everything focused on West Britain, on 0:11:41.880 --> 0:11:48.160 Ireland in Northern Ireland. Explain what happens now to this 0:11:48.360 --> 0:11:50.840 debate of Northern Ireland, and I want to go to 0:11:50.920 --> 0:11:54.319 a broader debate than just the border. There's more going 0:11:54.360 --> 0:11:57.400 on there than the backstop, and the border isn't there. 0:11:58.480 --> 0:12:00.720 There is and that's just really because of all the 0:12:00.760 --> 0:12:03.079 background there is to the troubles that were in Northern 0:12:03.080 --> 0:12:05.920 Ireland in the nineteen seventies and nineteen eighties, which still 0:12:06.320 --> 0:12:09.600 similar a little bit under the surface. And whereas normally 0:12:09.720 --> 0:12:13.720 having a border would not be a huge problem, in 0:12:13.800 --> 0:12:16.840 this particular case, it's got all sorts of political overtones. 0:12:17.120 --> 0:12:19.800 Nobody wants to have a hard border there. That Subnash 0:12:19.840 --> 0:12:22.960 don't want that, The Northernish don't want that, the British 0:12:22.960 --> 0:12:25.160 don't want that. You doesn't want it. But we will 0:12:25.240 --> 0:12:27.719 need to find some solution that will work without being 0:12:27.760 --> 0:12:30.520 a hard border there. And I think technologically that ought 0:12:30.520 --> 0:12:33.079 to be possible, but it's just a question of getting 0:12:33.080 --> 0:12:35.679 everybody to agree to that. John the strategy of Labor 0:12:35.760 --> 0:12:38.720 so far has been to let the Conservatives fight with themselves, 0:12:38.760 --> 0:12:40.160 and to be honest with you, it's been a pretty 0:12:40.160 --> 0:12:42.240 good strategy as well. John, What do you want to 0:12:42.280 --> 0:12:46.640 see from the Labor Party over the coming months. Well, 0:12:47.080 --> 0:12:49.640 my own personal view is that the best solution to 0:12:50.480 --> 0:12:52.559 the difficulties we've got for the European Union will be 0:12:52.600 --> 0:12:55.240 for us to have a Canada type free trade deal, 0:12:55.800 --> 0:12:58.400 and my ideal would be for the Labor Party to 0:12:58.440 --> 0:13:02.000 pivot towards Routie for that rather than anything else. I'm 0:13:02.000 --> 0:13:04.120 not sure that's going to happen. I think the Labor 0:13:04.160 --> 0:13:05.960 Party is going to try and bring down the government 0:13:06.120 --> 0:13:08.760 with a vote of confidence, but I'm not sure that's 0:13:08.800 --> 0:13:13.199 going to work. It may move towards supporting a second referendum. 0:13:13.440 --> 0:13:15.600 All of that a course of faction which is fraught 0:13:15.600 --> 0:13:18.920 with difficulties. The problem is the Labor Party is very split, 0:13:19.360 --> 0:13:22.120 partly because although himps are very remain and so are 0:13:22.160 --> 0:13:25.199 most of the Labor Party members, the people who elect 0:13:25.280 --> 0:13:28.720 the Labor government, the large numbers of industrial people in 0:13:28.840 --> 0:13:32.120 Wales and the midlands of the North, who depends who 0:13:32.200 --> 0:13:35.679 Labor depends on for their support, and mostly voting Leave. Yeah, 0:13:35.960 --> 0:13:39.160 it's true there are parts of the labor core constituencies 0:13:39.200 --> 0:13:41.640 that did vote for Leave. John, I want your view 0:13:41.640 --> 0:13:43.760 on something that's really important to the City of London. 0:13:43.760 --> 0:13:45.840 There's many people that Tom and I will speak to 0:13:46.120 --> 0:13:48.160 in the square mile in the City of London in 0:13:48.240 --> 0:13:51.960 financial services who weren't so much worried about a hard Brexit. 0:13:52.000 --> 0:13:54.560 They're perhaps more worried about the prospect of Jeremy Corbyn 0:13:54.600 --> 0:13:56.959 becoming the prime Minister. John, can you speak to that 0:13:57.080 --> 0:14:01.680 at all? Should we fear Jeremy corbyon um? I think 0:14:01.760 --> 0:14:04.400 it's very easy to exaggerate the problems for the city 0:14:04.440 --> 0:14:08.160 that Jeremy Corbyn uh toward the government that he's heading 0:14:08.240 --> 0:14:11.720 up might might cause. I mean, I think in practice 0:14:11.800 --> 0:14:14.920 the run for maneuver that the labor government would have 0:14:15.520 --> 0:14:19.400 on constraining the city would would be fairly limited. And 0:14:19.640 --> 0:14:23.600 the any labor government, any government, depends very heavily on 0:14:23.680 --> 0:14:26.440 the success of the economy to make sure that its 0:14:26.440 --> 0:14:29.560 support is retained. And I think to attack the city 0:14:29.560 --> 0:14:33.200 in a major way and cause all sorts of economic 0:14:33.280 --> 0:14:35.920 problems and reductions of income and so on, it's not 0:14:36.080 --> 0:14:40.720 really in the labor parties playbook John the idea of leaving. 0:14:40.920 --> 0:14:44.560 I witnessed this firsthand on the green at Westminster. Of 0:14:44.640 --> 0:14:50.160 the geography of of leave. The elite of London aren't 0:14:50.200 --> 0:14:53.000 spoken of enough. They say, they talk about remain. I 0:14:53.080 --> 0:14:58.480 get that, and the global internationalists Zeitgeist and all. Did 0:14:58.560 --> 0:15:03.120 they have a compromise point? Did do the remain people 0:15:03.200 --> 0:15:10.120 have a distance they can travel to meet leave or not? Well, 0:15:10.280 --> 0:15:12.440 I mean, I'm not sure there is. I mean in 0:15:12.480 --> 0:15:15.480 the end that I think there's going to be a 0:15:15.560 --> 0:15:19.400 choice between whether we stay in or rejoin the European 0:15:19.480 --> 0:15:22.040 Union if it's after the twenty nine March, or whether 0:15:22.080 --> 0:15:25.360 we have a free trade from outside. What's happened over 0:15:25.400 --> 0:15:28.480 the last two years is that the result of the 0:15:28.640 --> 0:15:32.120 election held in twenty seventeen was to have a Parliament 0:15:32.120 --> 0:15:36.080 that was determined to stay very close to Europe, half 0:15:36.160 --> 0:15:39.480 in the Single Market and half in the Customs Union. 0:15:39.880 --> 0:15:44.000 And for very understandable reasons, the EU have hated that 0:15:44.120 --> 0:15:48.320 because it affects the compromises the security and integrity of 0:15:48.400 --> 0:15:51.040 the Single Market and Customs Union. And I think what 0:15:51.160 --> 0:15:53.160 in the end may happen is that the British people 0:15:53.200 --> 0:15:55.040 are just going to have to make a choice about 0:15:55.080 --> 0:15:58.040 either being fully in or fully out, and we'll have 0:15:58.120 --> 0:16:00.800 to see how that breaks over the next through Uh, 0:16:01.720 --> 0:16:05.120 well weeks now, it's not even month. We'll jump find 0:16:05.120 --> 0:16:07.720 a question for you. Can this Parliament pass a deal 0:16:07.840 --> 0:16:12.400 before the under January? I would be very surprised if 0:16:12.400 --> 0:16:14.360 it does. I think what's much more likely if they 0:16:14.440 --> 0:16:17.840 do will come back sometime in January, will get voted down, 0:16:18.280 --> 0:16:20.960 and then they'll be all sorts of options on the table, 0:16:21.000 --> 0:16:23.960 whether we go for a Norwegian type deal, whether we 0:16:24.040 --> 0:16:30.080 have a possibly pivoting towards the free trade deal, whether 0:16:30.160 --> 0:16:35.520 we have another another referendum. I think there's all these 0:16:35.600 --> 0:16:38.360 choices that would be built on the table, but whether 0:16:38.360 --> 0:16:40.480 it's actually a majority for any of them, I think 0:16:40.480 --> 0:16:45.120 it's very doubtful. Well we'll leave We're going to leave 0:16:45.160 --> 0:16:47.200 it there, jam Mills, thank you so much with Jamil, 0:16:49.040 --> 0:16:51.120 because we have such an important guest with us. He 0:16:51.240 --> 0:16:55.160 is Steve Major of HSBC. Stephen Major has been just 0:16:55.400 --> 0:16:58.880 absolute spot out and interest rates and with that has 0:16:58.920 --> 0:17:03.400 been a real he knew what HSBC call Steve Major. 0:17:03.440 --> 0:17:05.600 I think of your colleague Ben Laidler in New York 0:17:06.320 --> 0:17:10.640 rather optimistic on equities from my last conversation David Bloom 0:17:10.680 --> 0:17:14.439 with an outlier call and strong dollar is well in 0:17:14.480 --> 0:17:17.399 the backdrop of this, Steve listening to Mr drag E 0:17:18.080 --> 0:17:22.080 is how tempered this time is? How tempered this era 0:17:22.320 --> 0:17:26.359 is to all of our listeners. What's the permanence of 0:17:26.400 --> 0:17:31.440 this low interest rate world? Well? I guess this inflation. 0:17:32.160 --> 0:17:35.080 And the first question that went to Mr Jock just 0:17:35.160 --> 0:17:39.840 then was about the technicalities on the the investment program. 0:17:39.880 --> 0:17:42.760 I dare say the next question might will be on inflation. 0:17:42.920 --> 0:17:46.000 I mean someone's got to ask him, Yes, what what 0:17:46.200 --> 0:17:49.359 happened to the vigor in the labor market that you 0:17:49.440 --> 0:17:53.440 spoke of last time? Because I do remember it very clearly. 0:17:53.440 --> 0:17:57.320 It's only the last meeting. People people were questioning whether 0:17:57.359 --> 0:17:59.800 he was on his own it was. It was either 0:18:00.040 --> 0:18:02.320 the last meeting or the one before Tom But as 0:18:02.359 --> 0:18:04.119 the point, the point is he was talking about an 0:18:04.119 --> 0:18:08.879 inflation that was coming through and vigger in the I 0:18:08.880 --> 0:18:12.520 think it was vigger in the wage market. So where 0:18:12.600 --> 0:18:15.919 is it that? That's the question. And I guess he 0:18:16.000 --> 0:18:19.080 might regret saying that. I guess we will make mistakes. Well, 0:18:19.119 --> 0:18:23.720 but it's it's a proxy, Steve for every single conversation. 0:18:23.800 --> 0:18:26.240 If we can move on from Mr Dragging to the 0:18:26.320 --> 0:18:30.240 challenges of my conversation with Vice Chairman Clarida, he stated 0:18:30.320 --> 0:18:34.440 he saw reasonable growth in the United States. What our 0:18:34.440 --> 0:18:37.080 listeners know is they've got a two C D if 0:18:37.119 --> 0:18:39.920 they're lucky, or you know, they're looking at a bond 0:18:40.000 --> 0:18:45.239 matrix at HSBC that's subdued. What is the permanence of 0:18:45.280 --> 0:18:49.600 this era? Yeah, so um I touched on it with inflation, 0:18:49.680 --> 0:18:53.439 but I guess the Vice chair at the FED is 0:18:53.480 --> 0:18:58.560 familiar because of his previous job with the global output gaps, 0:18:58.560 --> 0:19:02.840 global Phillips curve. And so if you put together the 0:19:02.880 --> 0:19:05.120 economies of the rest of the world and combine them 0:19:05.119 --> 0:19:08.119 with the US, it's quite clear that US yields of 0:19:08.200 --> 0:19:12.600 two for bills quite high and and and that that's 0:19:12.640 --> 0:19:15.879 the simple point. I think it's quite salient. Rather than 0:19:15.920 --> 0:19:19.280 look at the US Phillips curve and the US unemployment 0:19:19.359 --> 0:19:22.280 rate in the US pay rolls, etcetera, let's just go 0:19:22.400 --> 0:19:25.600 more global, let's bring it all together. So what's happened 0:19:25.640 --> 0:19:29.120 in two thousand and eighteen is that the US has 0:19:29.240 --> 0:19:33.480 exported tightening of financial conditions to everybody else. Only in 0:19:33.520 --> 0:19:36.159 the last two months, did it come back home in 0:19:36.240 --> 0:19:40.480 the form of wider credit spreads, we co equities, collapsing 0:19:40.480 --> 0:19:45.399 oil prices, and a you turn from the Fed chair? Okay, 0:19:45.440 --> 0:19:47.439 are you turned from the Fed chair? And a modest 0:19:47.520 --> 0:19:50.840 you turn from Mr Dragon looking at inflation risk to 0:19:50.920 --> 0:19:54.679 the downside, I guess. And and then I want to 0:19:54.720 --> 0:19:58.000 go back to the sharks that our American listeners could see. 0:19:58.359 --> 0:20:00.919 And I've got to go to your valuable colleague, David 0:20:00.920 --> 0:20:05.159 Bloom who I'm sorry, Steve, it's an outlier call of 0:20:05.200 --> 0:20:09.200 a demonstrably stronger dollar. What are the events that get 0:20:09.240 --> 0:20:12.680 you to that stronger dollar? Well, well, look he's been 0:20:12.760 --> 0:20:16.040 right for most of the year, and yes, I guess 0:20:16.119 --> 0:20:18.159 valuable it is quite a good description of him. I 0:20:18.160 --> 0:20:20.359 can think of a few other words, some of them 0:20:20.440 --> 0:20:23.520 less polite. But the thing is with David is that 0:20:23.600 --> 0:20:28.480 he's he's strong on this conviction, but he's equally capable 0:20:28.560 --> 0:20:31.639 of changing his mind. And that's the nature of spot 0:20:31.760 --> 0:20:35.520 effects if the circumstances changed, since they will the few 0:20:35.800 --> 0:20:38.600 I cannot front run the forecast, and I don't know 0:20:38.640 --> 0:20:40.879 what the forecast might be in the future by definition, 0:20:41.280 --> 0:20:44.720 but look, if the cyclical circumstances changed that he is 0:20:44.760 --> 0:20:47.840 one of the factors that he would incorporate. David and 0:20:47.880 --> 0:20:50.840 the team have been very good and also identifying structural 0:20:50.880 --> 0:20:53.840 and political drivers to underpend the dollar, which has been 0:20:53.960 --> 0:20:56.760 very much case this year. This year, you've had political, 0:20:56.880 --> 0:21:00.200 structural and cyclical or driving the dollar higher. But you 0:21:00.240 --> 0:21:03.880 could take the cyclical blank away if the Fed chokes 0:21:03.920 --> 0:21:06.280 on the next rate hike, and then to look at 0:21:06.280 --> 0:21:09.280 another tension point. And we can do this, folks, within 0:21:09.320 --> 0:21:13.360 the matrix of Steve Major's fixed income world. It's one 0:21:13.359 --> 0:21:17.240 of the immovable forces of this entertaining eight weeks or 0:21:17.320 --> 0:21:20.880 make it frankly, twelve weeks has been the trade deficit 0:21:21.000 --> 0:21:25.040 vector in the United States moving uh in a I 0:21:25.080 --> 0:21:29.320 guess negative Trump direction. It's certainly not making the president happy. 0:21:29.359 --> 0:21:31.359 And that gets me, Steve Major to my chart of 0:21:31.400 --> 0:21:34.760 the year, which is twin deficits, which is, all of 0:21:34.840 --> 0:21:38.800 a sudden, we've got fiscal deficit to GDP, trade deficit 0:21:38.880 --> 0:21:46.680 to GDP moving towards the outlook. Is that possible? Yeah. 0:21:46.800 --> 0:21:50.399 Before we started this conversation, the economic data that was 0:21:50.440 --> 0:21:54.840 announced by one of your colleagues was on the the 0:21:54.840 --> 0:21:59.080 the labor market and on the import prices, So import 0:21:59.119 --> 0:22:02.640 prices of four and on the month. I guess that's 0:22:02.640 --> 0:22:06.400 a function of energy and dollar whatever you say, So 0:22:06.680 --> 0:22:10.680 look to answer the question rather than go around it. Um. 0:22:10.760 --> 0:22:13.840 The twin deficit thing is is fascinating to me because 0:22:14.840 --> 0:22:16.840 I'm sure you're aware of the fact that in a way, 0:22:16.880 --> 0:22:21.080 the US needs to run a deficit if the rest 0:22:21.080 --> 0:22:24.560 of the world's insurplus, and whether that's current account or not, 0:22:24.800 --> 0:22:28.119 it's just basic accounting and economics. Unless we want to 0:22:28.240 --> 0:22:31.400 export to the Moon or Mars, that's how it works. 0:22:31.400 --> 0:22:35.840 So so the thing is is that pursuing a smaller deficit, 0:22:36.359 --> 0:22:39.359 someone's going to have to pay either either the domestics 0:22:39.400 --> 0:22:43.160 are going to have to save more or or or 0:22:43.359 --> 0:22:46.520 you know, growth is going to be less foreign foreigners 0:22:46.560 --> 0:22:49.720 are going to sponsor less of the US market. But 0:22:49.800 --> 0:22:54.720 the interesting thing for me is that the budget deficit 0:22:54.880 --> 0:22:59.040 has been going up very late in the cycle, um, 0:22:59.080 --> 0:23:02.080 and this is not what you'd expect. So you've got 0:23:02.080 --> 0:23:04.200