1 00:00:10,039 --> 00:00:13,720 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Always 2 00:00:14,000 --> 00:00:17,560 Speaker 1: with Michael McKee. Daily we bring you insight from the 3 00:00:17,560 --> 00:00:22,800 Speaker 1: best in economics, finance, investment, and international relations. Find Bloomberg 4 00:00:22,840 --> 00:00:27,240 Speaker 1: Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and of course 5 00:00:27,760 --> 00:00:36,879 Speaker 1: on the Bloomberg. I can't imagine, Michael, where will we 6 00:00:37,000 --> 00:00:39,600 Speaker 1: will be as they go to the polls at seven 7 00:00:39,640 --> 00:00:44,440 Speaker 1: am tomorrow? What is that two am? We will not 8 00:00:44,520 --> 00:00:49,199 Speaker 1: be sitting here at at two am. But no, no, 9 00:00:49,240 --> 00:00:51,920 Speaker 1: But it's just it is going to be extraordinary and 10 00:00:52,520 --> 00:00:57,720 Speaker 1: it is transfixed the whole country, including our guest nice 11 00:00:57,800 --> 00:01:02,000 Speaker 1: enough to stop by Lord John Brown, Baron Brown of Mandingly, 12 00:01:03,080 --> 00:01:08,320 Speaker 1: the former head of British Petroleum. You have obviously many 13 00:01:08,440 --> 00:01:11,800 Speaker 1: insights into what you think the economic and the corporate 14 00:01:11,840 --> 00:01:13,720 Speaker 1: impact of this would be. But I think the most 15 00:01:13,760 --> 00:01:17,319 Speaker 1: interesting things that I've read you've written emotionally about your 16 00:01:17,400 --> 00:01:20,600 Speaker 1: ties to the United Kingdom and the importance of a 17 00:01:20,720 --> 00:01:25,280 Speaker 1: united Europe. So many people have talked about the economic 18 00:01:25,360 --> 00:01:29,760 Speaker 1: impact and the uncertainty that I felt that my voice 19 00:01:29,760 --> 00:01:32,479 Speaker 1: wouldn't add too much to that, but I did feel 20 00:01:32,520 --> 00:01:36,520 Speaker 1: that I knew something about the emotional ties that bind. 21 00:01:37,160 --> 00:01:42,039 Speaker 1: And it's very important to say that that keeping people 22 00:01:42,280 --> 00:01:46,280 Speaker 1: behaving as an inclusive set of people is essential. My 23 00:01:46,400 --> 00:01:50,760 Speaker 1: background as the child of someone who survived Ashwitz, a 24 00:01:50,840 --> 00:01:56,320 Speaker 1: Hungarian woman married to a British soldier, reminded me always 25 00:01:56,360 --> 00:02:00,960 Speaker 1: that Europe needs to be a place where now nationalism, 26 00:02:01,160 --> 00:02:06,680 Speaker 1: bad nationalism, is dampened down, because that's the precursor for trouble. 27 00:02:07,480 --> 00:02:12,440 Speaker 1: There is a confidence among levers when these topics are 28 00:02:12,480 --> 00:02:15,839 Speaker 1: brought up, these delicate topics of another time. I say 29 00:02:15,880 --> 00:02:18,600 Speaker 1: that with immense respect for the people of London. Just 30 00:02:18,760 --> 00:02:23,120 Speaker 1: outside our studios here, folks, is a beautiful square which 31 00:02:23,200 --> 00:02:26,640 Speaker 1: was the archery field of Tudor times and then was 32 00:02:26,720 --> 00:02:30,960 Speaker 1: buildings and such. And three bombs filled just within forty 33 00:02:31,040 --> 00:02:36,280 Speaker 1: fifty ft of our Bloomberg entry. Right here. There's a 34 00:02:36,440 --> 00:02:41,119 Speaker 1: certitude it can't happen again. These are the unspoken How 35 00:02:41,160 --> 00:02:45,280 Speaker 1: do you respond to people certain of a calmer Europe? 36 00:02:45,919 --> 00:02:49,360 Speaker 1: You can't be settin. You really can't be settin of anything, 37 00:02:49,480 --> 00:02:55,720 Speaker 1: especially with the number of people involved nowadays of different backgrounds. Diversity, 38 00:02:55,840 --> 00:02:58,640 Speaker 1: and the main point about diversity is it's very healthy 39 00:02:58,720 --> 00:03:01,560 Speaker 1: to have different opinions to from people, but you need 40 00:03:01,639 --> 00:03:04,600 Speaker 1: to pull them together. You need something that binds them, 41 00:03:04,680 --> 00:03:09,040 Speaker 1: includes them, and one of those has to be continual peace, 42 00:03:09,400 --> 00:03:12,840 Speaker 1: which is the precurstor for prosperity. I dona you can 43 00:03:12,880 --> 00:03:14,880 Speaker 1: be certain about that. You've got to work at it. 44 00:03:15,200 --> 00:03:19,600 Speaker 1: European Union basically founded as an economic organization to try 45 00:03:19,639 --> 00:03:22,399 Speaker 1: to rebuild after the war, but evolved into a way 46 00:03:22,520 --> 00:03:26,519 Speaker 1: to keep countries united, feeling being if they were united economically, 47 00:03:26,520 --> 00:03:28,919 Speaker 1: they wouldn't have as much reason. Well, it's to stop. 48 00:03:29,360 --> 00:03:34,160 Speaker 1: Stop the ancient disputes have occurred. Do you think that 49 00:03:34,680 --> 00:03:38,880 Speaker 1: it has worked enough that you say, you can't be certain? 50 00:03:39,360 --> 00:03:42,240 Speaker 1: But you look at the trade ties between two two 51 00:03:42,400 --> 00:03:47,120 Speaker 1: historical enemies like Germany and France. Have they been tied 52 00:03:47,160 --> 00:03:51,720 Speaker 1: together enough economically now that the old Europe of the 53 00:03:51,760 --> 00:03:55,040 Speaker 1: twentieth century and earlier is gone. Well, I think so. 54 00:03:55,160 --> 00:03:57,880 Speaker 1: I think a lot of the disputes have not beaten 55 00:03:58,640 --> 00:04:02,680 Speaker 1: to the point of stream breakdown. There's been plenty of 56 00:04:02,720 --> 00:04:06,360 Speaker 1: disputes between members of the European Union and the UK, 57 00:04:06,960 --> 00:04:09,640 Speaker 1: but in the end they have they have a certainly 58 00:04:09,640 --> 00:04:13,480 Speaker 1: at least a common trade purpose and a very important 59 00:04:13,560 --> 00:04:16,760 Speaker 1: set of places that they can talk to each other. 60 00:04:17,080 --> 00:04:21,560 Speaker 1: And therefore it calms things down and keeps people together. Now, 61 00:04:21,760 --> 00:04:24,000 Speaker 1: you do approach this also from the point of view 62 00:04:24,080 --> 00:04:27,800 Speaker 1: of a business person, and there are a number of 63 00:04:27,800 --> 00:04:32,040 Speaker 1: business people who make the argument that despite the ties 64 00:04:32,279 --> 00:04:35,880 Speaker 1: between the UK and the continent now or maybe in 65 00:04:35,960 --> 00:04:39,960 Speaker 1: spite of the ties, things are not as good under 66 00:04:40,520 --> 00:04:45,599 Speaker 1: EU management now because power is devolving towards Brussels in 67 00:04:45,640 --> 00:04:49,960 Speaker 1: a bureaucratic way that ultimately harms the interest of UK business. 68 00:04:50,480 --> 00:04:53,080 Speaker 1: I think the vast number of business people would say 69 00:04:53,160 --> 00:04:57,000 Speaker 1: that's not the case on balance. Clearly everybody has a 70 00:04:57,080 --> 00:05:01,480 Speaker 1: specific gripe with one stand do or regulation or another. 71 00:05:01,920 --> 00:05:05,120 Speaker 1: The vast bulk of these regulations, in my opinion, have 72 00:05:05,200 --> 00:05:10,200 Speaker 1: been involved with consumer protection and safety and health. But 73 00:05:10,320 --> 00:05:13,359 Speaker 1: there are things that annoy everybody. But the work point is, 74 00:05:13,400 --> 00:05:16,440 Speaker 1: I think, on balance, is a good or bad? Has 75 00:05:16,480 --> 00:05:19,520 Speaker 1: it opened up standards to allow things to move freely 76 00:05:19,600 --> 00:05:23,480 Speaker 1: across borders? The answers I think yes. I think if 77 00:05:23,520 --> 00:05:27,160 Speaker 1: we were really I believe as a nation we should 78 00:05:27,320 --> 00:05:31,280 Speaker 1: we should take a very active, even more active role 79 00:05:31,680 --> 00:05:36,400 Speaker 1: in the technocratic management of the EU. We have, for example, 80 00:05:37,279 --> 00:05:42,480 Speaker 1: as the UK are six of the economic output of Europe. 81 00:05:43,360 --> 00:05:46,720 Speaker 1: But yet we only have four percent of the bureaucrats. 82 00:05:48,240 --> 00:05:50,479 Speaker 1: More people to go to Brussels, I think so. I 83 00:05:50,520 --> 00:05:54,200 Speaker 1: think there's a different attitude. It's about diversity, and I 84 00:05:54,240 --> 00:05:57,000 Speaker 1: think we should at least match. I think one of 85 00:05:57,000 --> 00:05:59,360 Speaker 1: the things to me the French and the Italians. One 86 00:05:59,400 --> 00:06:03,120 Speaker 1: of the questions as the leave side raises though, is 87 00:06:03,240 --> 00:06:06,560 Speaker 1: where does Brussels go from here? That it is inherent 88 00:06:06,680 --> 00:06:10,000 Speaker 1: in a bureaucracy to try to and not only maintain 89 00:06:10,040 --> 00:06:13,240 Speaker 1: itself but expand, and that there will be an ever 90 00:06:13,320 --> 00:06:18,040 Speaker 1: greater effort to assume power to a central European authority. 91 00:06:18,240 --> 00:06:21,560 Speaker 1: Not necessarily, I mean, I don't think anything is as 92 00:06:21,839 --> 00:06:24,600 Speaker 1: clear cut as that. It's up to the decision makers 93 00:06:25,440 --> 00:06:28,360 Speaker 1: to make it clear what it's doing. And I think 94 00:06:28,360 --> 00:06:31,040 Speaker 1: there are very few nations that want to actually make 95 00:06:31,080 --> 00:06:35,840 Speaker 1: themselves less productive by having unnecessary regulation. If we were 96 00:06:35,839 --> 00:06:38,200 Speaker 1: to put you on the surveillance Gulf stream today and 97 00:06:38,279 --> 00:06:42,359 Speaker 1: fly up to Aberdeen, to the British Petroleum offices in 98 00:06:42,480 --> 00:06:46,880 Speaker 1: Aberdeen by the Riverdeen North north West rather of Aberdeen, 99 00:06:47,000 --> 00:06:49,680 Speaker 1: what would you say to the employees of BP today 100 00:06:49,800 --> 00:06:53,360 Speaker 1: who are on the fence. They're undecided, they've got sympathies 101 00:06:53,440 --> 00:06:56,640 Speaker 1: to leave, they have sympathies to remain. Well, maybe your 102 00:06:57,240 --> 00:06:59,120 Speaker 1: being in Scotland. I think a lot of people that 103 00:06:59,279 --> 00:07:02,719 Speaker 1: would be the main because they see the need to 104 00:07:02,800 --> 00:07:08,160 Speaker 1: be a separate notion within a wider framework and and 105 00:07:08,200 --> 00:07:10,000 Speaker 1: I think in Scotland that would be the case. But 106 00:07:10,080 --> 00:07:13,400 Speaker 1: I think most people would say, look, it's it's worked 107 00:07:13,640 --> 00:07:16,720 Speaker 1: pretty well so far. It hasn't got in the way 108 00:07:16,720 --> 00:07:20,240 Speaker 1: of the things that BP would want to do, I 109 00:07:20,560 --> 00:07:24,160 Speaker 1: would suggest in my experience, and therefore, why would why 110 00:07:24,240 --> 00:07:28,000 Speaker 1: why would you want to open up this incredibly costly 111 00:07:28,120 --> 00:07:32,560 Speaker 1: uncertainty for the future. And it's a bit like I mean, 112 00:07:32,600 --> 00:07:36,560 Speaker 1: I hate drawing analogies between politics and business, but as 113 00:07:36,600 --> 00:07:38,880 Speaker 1: a business person, you would never want to open up 114 00:07:38,920 --> 00:07:43,280 Speaker 1: a gap of uncertainty of such extreme amounts. Say well, 115 00:07:43,680 --> 00:07:45,000 Speaker 1: it's going to take me a couple of years to 116 00:07:45,000 --> 00:07:47,560 Speaker 1: figure out what to do. I think you would be 117 00:07:47,600 --> 00:07:52,880 Speaker 1: punished rather severely by the markets. Uh. You you were 118 00:07:53,200 --> 00:07:56,160 Speaker 1: the former head of BP and now you're working for 119 00:07:57,000 --> 00:08:00,720 Speaker 1: some funds and keeping track and sure of what is 120 00:08:00,720 --> 00:08:02,720 Speaker 1: going on in the world. We're in this unusual period 121 00:08:03,520 --> 00:08:07,880 Speaker 1: where we don't know what's happening with the British referendum, 122 00:08:07,920 --> 00:08:09,720 Speaker 1: and we don't know what is happening with the FED, 123 00:08:09,800 --> 00:08:12,720 Speaker 1: in part because we're waiting for some data and probably 124 00:08:12,760 --> 00:08:15,160 Speaker 1: will get a little bit better view once we get 125 00:08:15,200 --> 00:08:18,440 Speaker 1: the next jobs report in the US. So I compared 126 00:08:18,480 --> 00:08:20,640 Speaker 1: it to that airplane that they take astronauts up and 127 00:08:20,680 --> 00:08:22,680 Speaker 1: that dives down and all of a sudden everybody's wait 128 00:08:22,680 --> 00:08:24,240 Speaker 1: list for a few minutes. We're kind of in that 129 00:08:24,440 --> 00:08:26,640 Speaker 1: wait list for a few minutes period in the markets. 130 00:08:27,200 --> 00:08:31,720 Speaker 1: Suppose we land, you know, leaving out the Brexit vote. 131 00:08:32,559 --> 00:08:35,280 Speaker 1: What is your take on the rest of the world economy, 132 00:08:35,360 --> 00:08:38,960 Speaker 1: on corporate earnings, on the outlook, what should investors be 133 00:08:39,040 --> 00:08:42,840 Speaker 1: thinking about, um, you know, if, if, and when we 134 00:08:42,880 --> 00:08:45,200 Speaker 1: get back to some sort of a status quo. So 135 00:08:45,440 --> 00:08:48,280 Speaker 1: a big question. I let me tap the sector I'm 136 00:08:48,280 --> 00:08:51,560 Speaker 1: I'm in. First of all, I think people are looking 137 00:08:51,640 --> 00:08:57,560 Speaker 1: at the energy business and saying, unusual future coming up. 138 00:08:57,840 --> 00:09:02,200 Speaker 1: But oil feeling a bit better are now because there's 139 00:09:02,240 --> 00:09:05,120 Speaker 1: a lot of disruption. It's not actually to do with 140 00:09:05,160 --> 00:09:09,400 Speaker 1: fundamentals of supply and demand, is to do with political disruption. 141 00:09:09,880 --> 00:09:13,079 Speaker 1: And I think that's a theme everywhere. People are wondering 142 00:09:13,559 --> 00:09:17,840 Speaker 1: exactly where the decision makers want to go. Brexit is 143 00:09:18,200 --> 00:09:22,880 Speaker 1: an example of that. The outcome of the US election 144 00:09:23,559 --> 00:09:27,360 Speaker 1: is clearly going is putting a damper on people's views 145 00:09:27,400 --> 00:09:31,839 Speaker 1: of what's going to happen in NAFTA generally, and people 146 00:09:31,880 --> 00:09:35,640 Speaker 1: are still accommodating to the changes in the way in 147 00:09:35,720 --> 00:09:40,880 Speaker 1: which the Chinese government is thinking about its future and 148 00:09:40,920 --> 00:09:43,560 Speaker 1: the mix of growth that it wants for the future. 149 00:09:44,040 --> 00:09:47,320 Speaker 1: So I think there's a lot of uncertainty which is 150 00:09:47,800 --> 00:09:51,120 Speaker 1: on the horizon here. People I think can see a 151 00:09:51,160 --> 00:09:55,720 Speaker 1: pathway through it, but many people are still waiting to see. 152 00:09:55,880 --> 00:09:58,920 Speaker 1: If you're still in the executive suite based on that, 153 00:09:59,400 --> 00:10:02,280 Speaker 1: would you be advising your corporate treasure to pull in 154 00:10:02,320 --> 00:10:06,960 Speaker 1: his horns and wait things out. No, because normally I 155 00:10:07,000 --> 00:10:11,000 Speaker 1: think great advances have made at a time of maximum uncertainty. 156 00:10:11,320 --> 00:10:15,280 Speaker 1: Obviously you've got to control risk, But I think going 157 00:10:15,400 --> 00:10:18,760 Speaker 1: home at the time of maximum uncertainty when you're in 158 00:10:18,800 --> 00:10:23,280 Speaker 1: a business that has opportunities is I think the wrong 159 00:10:23,320 --> 00:10:26,160 Speaker 1: way to go. So you've got to balance the risks. 160 00:10:26,200 --> 00:10:29,120 Speaker 1: But it seems to me you take a view you 161 00:10:29,200 --> 00:10:31,880 Speaker 1: know about your industry and take a view about energy. 162 00:10:32,360 --> 00:10:35,840 Speaker 1: Energy clearly will continue to grow, Oil will have a 163 00:10:35,960 --> 00:10:38,200 Speaker 1: role in that gas will have a bigger role in it, 164 00:10:39,040 --> 00:10:42,520 Speaker 1: and you need to position yourself in the right assets 165 00:10:42,559 --> 00:10:46,000 Speaker 1: for the future low cost. The polarization in the United 166 00:10:46,000 --> 00:10:49,680 Speaker 1: States and the United Kingdom between the elites and putting 167 00:10:49,720 --> 00:10:53,040 Speaker 1: executives in that group as well and the people, I 168 00:10:53,080 --> 00:10:55,439 Speaker 1: believe I've never seen it like it is right now, 169 00:10:56,040 --> 00:11:00,079 Speaker 1: is part of that. Executive compensation is part of that. 170 00:11:00,480 --> 00:11:04,160 Speaker 1: The foolishness of the past twenty years, the ratios that 171 00:11:04,240 --> 00:11:08,280 Speaker 1: people throw out, I mean, there's the answer is yes 172 00:11:08,480 --> 00:11:11,840 Speaker 1: to an extent. I think people are very allergic to 173 00:11:12,000 --> 00:11:15,640 Speaker 1: what they appear to see as cronyism. You know, people 174 00:11:16,360 --> 00:11:20,240 Speaker 1: like each other, agreeing with each other, and they're allergic 175 00:11:20,360 --> 00:11:24,400 Speaker 1: to to a lack of transparency. If it's too complicated, 176 00:11:24,480 --> 00:11:29,439 Speaker 1: nobody understands it, therefore you will mistrust it. Executive compensation 177 00:11:29,960 --> 00:11:33,960 Speaker 1: has fallen into both those those buckets and has produced 178 00:11:34,040 --> 00:11:40,280 Speaker 1: I think answers that for for people generally, are unbelievable. 179 00:11:40,960 --> 00:11:43,680 Speaker 1: What does Prime Minister Cameron have to do in the 180 00:11:43,760 --> 00:11:49,160 Speaker 1: next hours to reconnect with the people He's desperate out there? 181 00:11:49,320 --> 00:11:52,240 Speaker 1: We could see that with Lord Major this morning up. 182 00:11:52,280 --> 00:11:56,000 Speaker 1: I believe it was an arsenal. I hope there's statements 183 00:11:56,040 --> 00:11:59,840 Speaker 1: not only about the economy, which is very very important, 184 00:12:00,120 --> 00:12:04,200 Speaker 1: uncertainty very very important, but also emotion. In the end, 185 00:12:05,040 --> 00:12:08,360 Speaker 1: we have to believe that including in Europe is a 186 00:12:08,440 --> 00:12:11,600 Speaker 1: good thing for the UK, and he needs to say that. 187 00:12:12,080 --> 00:12:16,360 Speaker 1: You mentioned lack of confidence in where leaders around the 188 00:12:16,360 --> 00:12:19,000 Speaker 1: world want to take us, and we began by talking 189 00:12:19,040 --> 00:12:23,280 Speaker 1: about the historical emotion around this issue. And I'm wondering 190 00:12:23,320 --> 00:12:26,560 Speaker 1: if you take it even further back, and uh, do 191 00:12:26,600 --> 00:12:29,280 Speaker 1: you do you think, as we did in the nineteen thirties, 192 00:12:29,320 --> 00:12:31,640 Speaker 1: we have leaders who may not be up to the task. 193 00:12:32,600 --> 00:12:36,120 Speaker 1: I think it's I expect we always say that, you know, 194 00:12:36,360 --> 00:12:40,120 Speaker 1: whatever generation there is, there's probably people saying the leaders 195 00:12:40,120 --> 00:12:42,760 Speaker 1: on top of the task. I think leaders today are 196 00:12:42,880 --> 00:12:46,720 Speaker 1: more scrutinized than they ever have been, and as a result, 197 00:12:46,800 --> 00:12:51,760 Speaker 1: they apparently feel boxed in everything they say, everything they 198 00:12:51,800 --> 00:12:54,680 Speaker 1: do is scrutinized in a way which it wasn't in 199 00:12:54,679 --> 00:12:57,200 Speaker 1: the past. But people are getting used to it. It 200 00:12:57,320 --> 00:13:00,360 Speaker 1: has to be a different way of leading. I do think, however, 201 00:13:00,840 --> 00:13:03,320 Speaker 1: that there is no substitute for having a very clear 202 00:13:03,440 --> 00:13:06,320 Speaker 1: understanding of the direction you want to go in, and 203 00:13:06,400 --> 00:13:09,280 Speaker 1: you have to be uncompromising in that to an extent. 204 00:13:10,320 --> 00:13:12,600 Speaker 1: But but really I'm compromising and you have to take 205 00:13:12,640 --> 00:13:15,160 Speaker 1: therefore the criticism you get. Ms Brown, Thank you so 206 00:13:15,240 --> 00:13:17,440 Speaker 1: much for coming in. Lord Brown, of course formerly with 207 00:13:18,120 --> 00:13:35,600 Speaker 1: BP and decidedly asking his United Kingdom to remain Well. 208 00:13:35,640 --> 00:13:38,679 Speaker 1: We are continuing to follow, of course the UK referendum. 209 00:13:38,720 --> 00:13:41,840 Speaker 1: But uh, as we were noting with Lord Brown, it 210 00:13:41,960 --> 00:13:45,520 Speaker 1: is not the only issue out there for investors, particularly 211 00:13:45,640 --> 00:13:48,880 Speaker 1: in Europe. A lot going on the continent that will 212 00:13:49,800 --> 00:13:52,640 Speaker 1: come front and center as the year goes on. We 213 00:13:52,760 --> 00:13:56,840 Speaker 1: really are trying, folks, to be a proverbial fair and balanced. 214 00:13:56,960 --> 00:13:59,960 Speaker 1: But you are so right, Mike that there's a lot 215 00:14:00,160 --> 00:14:05,480 Speaker 1: more out there, whether it's disinflation, deflation. You mentioned Spain yesterday. 216 00:14:05,679 --> 00:14:08,120 Speaker 1: You've got an election coming up on Sunday in Spain 217 00:14:08,160 --> 00:14:11,040 Speaker 1: with implications election in the fall, vote in the fall 218 00:14:11,240 --> 00:14:14,440 Speaker 1: in Italy. Much going on. Midg Roman has to keep 219 00:14:14,480 --> 00:14:16,480 Speaker 1: track of it all for Eurasia Group. He's their chief 220 00:14:16,559 --> 00:14:20,720 Speaker 1: European analyst and he enjoins us now here on Bloomberg surveillance. 221 00:14:21,280 --> 00:14:25,040 Speaker 1: Bitch beyond well, we have the special vote on Sunday, 222 00:14:25,080 --> 00:14:27,960 Speaker 1: so it is the next thing, shall we say, beyond Brexit, 223 00:14:28,400 --> 00:14:31,840 Speaker 1: but what is likely though to be the most important 224 00:14:31,960 --> 00:14:37,120 Speaker 1: issue facing the European Union, with or without Great Britain 225 00:14:37,520 --> 00:14:40,880 Speaker 1: for the rest of the year. Thanks thanks for having 226 00:14:40,880 --> 00:14:43,160 Speaker 1: me on. I mean, look, it's the pressing to have 227 00:14:43,240 --> 00:14:45,280 Speaker 1: to talk about the same thing over and over again. 228 00:14:45,320 --> 00:14:48,560 Speaker 1: But the fact is the economic still looks fairly bad. 229 00:14:48,680 --> 00:14:53,280 Speaker 1: I mean you've mentioned Spain and the elections on Sunday. 230 00:14:53,520 --> 00:14:57,040 Speaker 1: I think both in Spain, also Portugal, perhaps in France 231 00:14:57,120 --> 00:14:58,840 Speaker 1: later in the States, we're all going to have to 232 00:14:58,840 --> 00:15:02,520 Speaker 1: do a fairly size of or fiscal correction because despite 233 00:15:02,600 --> 00:15:07,800 Speaker 1: favorable external economic let's say dynamics, the governments are basically 234 00:15:07,880 --> 00:15:10,920 Speaker 1: rolling back on fiscal policy and structural reform. So there's 235 00:15:10,960 --> 00:15:13,280 Speaker 1: a big debate to be had on fiscal correction in 236 00:15:13,320 --> 00:15:15,800 Speaker 1: Southern Europe. That the can has been kicked as as 237 00:15:15,840 --> 00:15:18,000 Speaker 1: well as we as we often say, but that is 238 00:15:18,040 --> 00:15:20,160 Speaker 1: going to come to a head I think in two three. 239 00:15:20,720 --> 00:15:22,680 Speaker 1: I think if you look at the monetary policy side, 240 00:15:22,680 --> 00:15:25,120 Speaker 1: things are also fairly bad, right, I mean, inflation just 241 00:15:25,240 --> 00:15:28,480 Speaker 1: refuses to move in line with the ECB's target, and 242 00:15:28,520 --> 00:15:32,120 Speaker 1: now you have a more complicated dynamic between Mario dragging 243 00:15:32,320 --> 00:15:36,480 Speaker 1: angler Merkel essentially I think Merkel views drags ultra lose 244 00:15:36,560 --> 00:15:39,160 Speaker 1: monetary policy as a risk, as a risk to her 245 00:15:39,200 --> 00:15:41,680 Speaker 1: re election next year. So you've got a more right 246 00:15:41,680 --> 00:15:44,080 Speaker 1: wing hawke Is stance coming out of Germany VA vd 247 00:15:44,160 --> 00:15:48,600 Speaker 1: ECB that also constrains Draggy on monetary policy. So both 248 00:15:48,600 --> 00:15:51,400 Speaker 1: the fiscal and monetary policy look bad. That's the start 249 00:15:51,400 --> 00:15:54,480 Speaker 1: of the conversation. There's a course a lot more that 250 00:15:54,640 --> 00:16:00,040 Speaker 1: You've also mentioned, refugee crisis, constitutional reform in Italy, you 251 00:16:00,360 --> 00:16:04,240 Speaker 1: mentioned the idea of fiscal issues for these countries. Basically, 252 00:16:04,240 --> 00:16:07,160 Speaker 1: what you're saying is they're still going to exceed their 253 00:16:07,200 --> 00:16:10,280 Speaker 1: EU budget targets and they're going to have to cut 254 00:16:10,360 --> 00:16:15,120 Speaker 1: spending even further. Austerity is not over absolutely. I mean, 255 00:16:15,160 --> 00:16:19,600 Speaker 1: in Spain, the correct that the fiscal correction that Brussels 256 00:16:19,600 --> 00:16:22,240 Speaker 1: and Berlin are likely to impose in a worst case 257 00:16:22,240 --> 00:16:25,080 Speaker 1: scenario could be one percent of GDP in the order 258 00:16:25,120 --> 00:16:28,920 Speaker 1: of fifteen billion euros, right. I mean in Portugal you've 259 00:16:28,920 --> 00:16:31,320 Speaker 1: got a three way coalition government that, as you said, 260 00:16:31,440 --> 00:16:34,680 Speaker 1: is also not in line with this EU mandated fiscal targets. 261 00:16:34,800 --> 00:16:38,640 Speaker 1: They're going to have to cut spending, raised taxes. That's 262 00:16:38,720 --> 00:16:42,320 Speaker 1: the debate in Greece as well. I think also in France. 263 00:16:42,720 --> 00:16:45,080 Speaker 1: Italy is a little better. But as you've said, I mean, 264 00:16:45,080 --> 00:16:48,160 Speaker 1: if you look at the local elections this Sunday, the 265 00:16:48,240 --> 00:16:50,800 Speaker 1: populist Five Star movement did really well. They're not only 266 00:16:50,800 --> 00:16:53,600 Speaker 1: one room they want to ring. They won Milan. There's 267 00:16:53,600 --> 00:16:57,560 Speaker 1: a chance, not not non negligible that in an early 268 00:16:57,560 --> 00:17:00,600 Speaker 1: election scenario or indeed the Five Star would ein power 269 00:17:00,640 --> 00:17:03,240 Speaker 1: in Italy. That would be terrible for Italy and terrible 270 00:17:03,280 --> 00:17:06,359 Speaker 1: for economics, not only in Italy but the broader euro area. 271 00:17:06,760 --> 00:17:10,880 Speaker 1: Mitch Roman works with Ian at Eurasia Group, and he's 272 00:17:10,920 --> 00:17:14,760 Speaker 1: somewhat important to speak to because he's actually worked on 273 00:17:14,960 --> 00:17:18,320 Speaker 1: both Death Stars. He's worked for the United Kingdom government 274 00:17:18,800 --> 00:17:22,600 Speaker 1: in Treasury. He's also worked at the European Commission's director 275 00:17:22,600 --> 00:17:26,320 Speaker 1: at General. I guess it was to say General for 276 00:17:26,400 --> 00:17:30,200 Speaker 1: Economic and Financial Affairs, Midge. What's the difference between getting 277 00:17:30,280 --> 00:17:33,560 Speaker 1: business done in London and getting business done in Brussels. 278 00:17:34,240 --> 00:17:36,440 Speaker 1: It's a lot. It's a lot easier to get business 279 00:17:36,440 --> 00:17:39,399 Speaker 1: done in London tom in Brussels as a there's a 280 00:17:39,440 --> 00:17:42,359 Speaker 1: lot of politics, a lot of bureaucracy. That was that 281 00:17:42,480 --> 00:17:46,159 Speaker 1: was certainly my experience from from working in the European Commission. 282 00:17:46,800 --> 00:17:51,000 Speaker 1: That being said, despite the let's say, the slow pace 283 00:17:51,119 --> 00:17:57,320 Speaker 1: with which Europe advances, you do ultimately see concrete agreements 284 00:17:57,320 --> 00:18:01,480 Speaker 1: over areas that are of course extremely challenging. The refugee 285 00:18:01,480 --> 00:18:04,359 Speaker 1: deal is a good example. Greece is bailout is a 286 00:18:04,440 --> 00:18:06,520 Speaker 1: good example. No, none of these things are perfect. I'm 287 00:18:06,560 --> 00:18:09,240 Speaker 1: not claiming that at all, but it does demonstrate that 288 00:18:09,400 --> 00:18:12,760 Speaker 1: some form of collective action involving a large number of 289 00:18:12,760 --> 00:18:17,160 Speaker 1: states is still possible, despite the politics and despite the bureaucracy. 290 00:18:17,359 --> 00:18:20,320 Speaker 1: The thing that interested me in your latest note is 291 00:18:20,440 --> 00:18:25,560 Speaker 1: that there are still peripheral countries. I mean, everybody follows Greece, 292 00:18:25,640 --> 00:18:31,880 Speaker 1: but still peripheral countries including Portugal, UH and even Um. 293 00:18:32,000 --> 00:18:35,920 Speaker 1: We talked about Spain, that are there are questions about 294 00:18:36,000 --> 00:18:38,480 Speaker 1: what happens to the government there and what happens to 295 00:18:38,560 --> 00:18:42,760 Speaker 1: their access to financial markets. Still yeah, I mean the 296 00:18:42,760 --> 00:18:44,840 Speaker 1: problem is a lot of these countries went through a 297 00:18:45,000 --> 00:18:49,240 Speaker 1: very frontloaded fiscal adjustment right after the debt crisis in 298 00:18:49,320 --> 00:18:54,160 Speaker 1: twenty ten through twelve, and that very aggressive fiscal timing 299 00:18:54,200 --> 00:18:58,760 Speaker 1: has totally decimated the politics in Southern Europe. It's almost 300 00:18:58,760 --> 00:19:02,480 Speaker 1: impossible now or any of these countries to produce a 301 00:19:02,560 --> 00:19:05,520 Speaker 1: single party government, a majority government. Instead, you're looking at 302 00:19:05,560 --> 00:19:09,520 Speaker 1: coalition parties where you have two or three different different 303 00:19:09,560 --> 00:19:13,600 Speaker 1: political parties in the mix, and they themselves, because they 304 00:19:13,600 --> 00:19:17,760 Speaker 1: have different ideologies, different policy priorities, they simply can't agree 305 00:19:17,800 --> 00:19:21,080 Speaker 1: on a mandate for reform. You're seeing that in Spain, 306 00:19:21,280 --> 00:19:24,080 Speaker 1: we're seeing it in Portugal. It's clearly the case in Greece. 307 00:19:24,280 --> 00:19:26,680 Speaker 1: And at some point that does become a question regarding 308 00:19:26,720 --> 00:19:32,520 Speaker 1: access to financial markets. Well, does it become a question 309 00:19:32,600 --> 00:19:36,240 Speaker 1: this year? Look, I think that the thing we're most 310 00:19:36,280 --> 00:19:38,880 Speaker 1: concerned about. I would say now when we look at 311 00:19:39,080 --> 00:19:41,199 Speaker 1: you know, post the Brexit vote, as you'll know our 312 00:19:41,280 --> 00:19:43,600 Speaker 1: view as Brexit won't happen. So when we look over 313 00:19:43,640 --> 00:19:46,680 Speaker 1: the landscape, one country we're very concerned about is Italy. 314 00:19:46,920 --> 00:19:49,119 Speaker 1: I mean, we have the local election result as I 315 00:19:49,200 --> 00:19:52,120 Speaker 1: As I say, the Five Star movement did extremely well. 316 00:19:52,560 --> 00:19:55,200 Speaker 1: We're very concerned about the extent to which they're going 317 00:19:55,240 --> 00:19:57,920 Speaker 1: to improve their standing over the next few years. If 318 00:19:57,960 --> 00:20:03,040 Speaker 1: if Renzi doesn't manage to pass this constitutional reform in October, 319 00:20:03,080 --> 00:20:05,119 Speaker 1: I think that will probably result in the collapse in 320 00:20:05,200 --> 00:20:08,040 Speaker 1: the government. If he does get the system he wants 321 00:20:08,040 --> 00:20:10,200 Speaker 1: and calls early elections. There's still a chance to five 322 00:20:10,200 --> 00:20:13,480 Speaker 1: star movement could win under that new system. And of 323 00:20:13,520 --> 00:20:16,679 Speaker 1: course what happens in Italy is massively consequential for the 324 00:20:16,720 --> 00:20:20,080 Speaker 1: euro Area and the EU. I think basically the Europeans 325 00:20:20,119 --> 00:20:23,920 Speaker 1: have come to the understanding at some point they may 326 00:20:23,960 --> 00:20:26,160 Speaker 1: lose Greece. So I don't think Greece would be a shock, 327 00:20:26,240 --> 00:20:29,080 Speaker 1: but Italy, I mean, that's a completely different question. I 328 00:20:29,119 --> 00:20:32,520 Speaker 1: mean that really speaks to the unspoken at least as 329 00:20:32,520 --> 00:20:36,440 Speaker 1: I see the British press totally Anglo sex and centric. 330 00:20:37,320 --> 00:20:41,560 Speaker 1: If they vote leave in the United Kingdom, that's got 331 00:20:41,560 --> 00:20:44,040 Speaker 1: to be a huge signal to four or five other 332 00:20:44,760 --> 00:20:48,480 Speaker 1: larger countries within Europe. Right, absolutely, Tom, and I think 333 00:20:48,520 --> 00:20:51,240 Speaker 1: that's part of the reason why we believe if the 334 00:20:51,320 --> 00:20:56,320 Speaker 1: UK does vote to leave the process of renegotiating its 335 00:20:56,359 --> 00:21:01,040 Speaker 1: relationship with the EU in terms of trade can access 336 00:21:01,040 --> 00:21:03,320 Speaker 1: to the Single Market, the French and the Germans are 337 00:21:03,320 --> 00:21:06,480 Speaker 1: going to make sure that's a painful process, precisely to 338 00:21:06,680 --> 00:21:10,159 Speaker 1: disincentivize euro skeptics in other countries from looking to do 339 00:21:10,200 --> 00:21:13,879 Speaker 1: the same thing as the UK. To me, is there 340 00:21:13,920 --> 00:21:17,320 Speaker 1: any country that would be likely to do that to 341 00:21:17,480 --> 00:21:21,480 Speaker 1: follow on or is that more of a red herring. No, 342 00:21:21,600 --> 00:21:23,480 Speaker 1: I don't look, I don't think it's a red head herring. 343 00:21:23,480 --> 00:21:26,399 Speaker 1: I think the countries were very concerned about how the Netherlands, 344 00:21:26,800 --> 00:21:29,840 Speaker 1: you know, look, extricating the UK from the EU will 345 00:21:29,840 --> 00:21:32,080 Speaker 1: be painful, But at the same time, you know, we're 346 00:21:32,080 --> 00:21:35,160 Speaker 1: not a member of the euro Area. We don't we're 347 00:21:35,200 --> 00:21:37,320 Speaker 1: not a member of the Sanen Area. We have opt 348 00:21:37,359 --> 00:21:39,520 Speaker 1: out and a whole host of for the policy areas. 349 00:21:39,760 --> 00:21:42,800 Speaker 1: If you lost the country like the Netherlands founding member 350 00:21:42,840 --> 00:21:46,720 Speaker 1: of the EU, obviously involved in the euro Area, involved 351 00:21:46,720 --> 00:21:49,200 Speaker 1: in all of the use of the integration initiatives, that 352 00:21:49,240 --> 00:21:50,960 Speaker 1: would be a lot more painful. That's what I think 353 00:21:50,960 --> 00:21:53,200 Speaker 1: call Europe is concerned about. I think if you look 354 00:21:53,280 --> 00:21:55,719 Speaker 1: for the reaster in Poland and Hungary, there's obviously a 355 00:21:55,720 --> 00:21:59,280 Speaker 1: big concern. Now you have right wing populist governments in 356 00:21:59,400 --> 00:22:03,080 Speaker 1: power talking about peace in Poland, Fidetian Hungary. These guys 357 00:22:03,119 --> 00:22:06,560 Speaker 1: are also I think our euro skeptics and will look 358 00:22:06,640 --> 00:22:08,879 Speaker 1: to look at what happens with the UK to decide 359 00:22:08,960 --> 00:22:12,399 Speaker 1: ultimately what we want to do regarding the evening forward 360 00:22:13,000 --> 00:22:17,520 Speaker 1: is America are euroskeptic. No, I I don't think. I 361 00:22:17,680 --> 00:22:21,520 Speaker 1: think America is skeptical about how the Europeans do some 362 00:22:21,600 --> 00:22:25,600 Speaker 1: of their business, but they fundamentally believe that the European 363 00:22:25,680 --> 00:22:29,879 Speaker 1: block has been beneficial for peace, prosperity, trade and economics. 364 00:22:29,920 --> 00:22:33,040 Speaker 1: Of course then things could work better, but I definitely 365 00:22:33,040 --> 00:22:35,680 Speaker 1: think the view across the Atlantic is where we're safe 366 00:22:35,680 --> 00:22:37,720 Speaker 1: and more prosperous world with the EU than we would 367 00:22:37,720 --> 00:22:41,720 Speaker 1: be without. There's an argument being made in the campaign 368 00:22:41,760 --> 00:22:46,359 Speaker 1: here that the Europeans would make it particularly painful for 369 00:22:46,440 --> 00:22:49,440 Speaker 1: the UK to leave in order to set an example. Yeah, 370 00:22:49,480 --> 00:22:53,800 Speaker 1: he's just for other countries. Do you think that, though, 371 00:22:54,200 --> 00:22:58,199 Speaker 1: would be I do? I do? I mean, look, I 372 00:22:58,280 --> 00:23:01,000 Speaker 1: think there's a a little annoying center for the rest 373 00:23:01,000 --> 00:23:04,520 Speaker 1: of the Union to give the UK a nice deal outside, 374 00:23:04,520 --> 00:23:06,560 Speaker 1: because all you're going to do then is energized the 375 00:23:06,560 --> 00:23:10,040 Speaker 1: front national now ahead of presidential elections next year, you're 376 00:23:10,040 --> 00:23:14,040 Speaker 1: going to energize the alternative. Wait wait, wait wait, what 377 00:23:14,600 --> 00:23:18,080 Speaker 1: does this mean? Can't cretely does this mean that the 378 00:23:18,119 --> 00:23:21,359 Speaker 1: Clerages is not going to have breach ease for me? 379 00:23:21,520 --> 00:23:24,120 Speaker 1: What does it? What does it mean when you say 380 00:23:24,240 --> 00:23:28,440 Speaker 1: they're gonna make it hard for Prime Minister Johnson, so 381 00:23:28,440 --> 00:23:30,800 Speaker 1: so so Tom, Look, I mean we we as the 382 00:23:30,920 --> 00:23:34,439 Speaker 1: UK do a huge amount of our trade with the 383 00:23:34,480 --> 00:23:36,640 Speaker 1: rest of the EU. As a share of GDP our 384 00:23:36,760 --> 00:23:39,720 Speaker 1: dwarfs any of the trade. Sir James Dyson had that 385 00:23:39,800 --> 00:23:42,399 Speaker 1: chart today in the Times. I get that right, So 386 00:23:42,400 --> 00:23:44,400 Speaker 1: then I think, so, Look, I think the point is 387 00:23:44,560 --> 00:23:47,320 Speaker 1: in order to maintain that level of trade and access 388 00:23:47,320 --> 00:23:49,679 Speaker 1: to the Single Market, the Europeans are essentially going to 389 00:23:49,720 --> 00:23:52,439 Speaker 1: say you've got to continue paying into the EU budget, 390 00:23:52,480 --> 00:23:54,320 Speaker 1: so there will be physical transfers from the UK to 391 00:23:54,400 --> 00:23:56,920 Speaker 1: the EU, and you have to also agree to three 392 00:23:56,920 --> 00:24:00,760 Speaker 1: movements of labor. Now there are two conditions only Johnson 393 00:24:00,840 --> 00:24:03,000 Speaker 1: will not be able to support. Right, He's going to 394 00:24:03,040 --> 00:24:05,320 Speaker 1: want to limit free movement. He's not going to want 395 00:24:05,320 --> 00:24:08,320 Speaker 1: to send fiscal transfers to the EU budget. But that 396 00:24:08,560 --> 00:24:10,680 Speaker 1: that I think will then come at a cost to 397 00:24:10,720 --> 00:24:12,800 Speaker 1: access to the Single market in terms of tariffs and 398 00:24:12,840 --> 00:24:15,560 Speaker 1: non tariff barriers that would have appeared on the real 399 00:24:15,600 --> 00:24:19,360 Speaker 1: economy in the UK. I mean, Vladimir Putin can't get 400 00:24:19,400 --> 00:24:23,160 Speaker 1: bree cheese? Is that going to be I'm serious? I mean, 401 00:24:23,240 --> 00:24:28,080 Speaker 1: I we we've been pounded here. Midge by different opinions, 402 00:24:28,359 --> 00:24:32,320 Speaker 1: starkly different opinions, and the what if I you know, folks, 403 00:24:32,320 --> 00:24:37,480 Speaker 1: I listen Olivia Blanchard and they're saying things life will 404 00:24:37,520 --> 00:24:41,000 Speaker 1: go on. You don't believe life will go on? Now? 405 00:24:41,040 --> 00:24:43,119 Speaker 1: I think. I think life will go on. But I 406 00:24:43,119 --> 00:24:46,280 Speaker 1: think there will be a large amount of uncertainty, certainly 407 00:24:46,320 --> 00:24:49,280 Speaker 1: for the two years while the renegotiation happens, and that 408 00:24:49,440 --> 00:24:52,040 Speaker 1: net net where the UK ends up via v the 409 00:24:52,160 --> 00:24:54,760 Speaker 1: EU will be less beneficial than where it sits today 410 00:24:54,880 --> 00:24:57,200 Speaker 1: as a full member. Now, life will still go on. 411 00:24:57,280 --> 00:24:59,520 Speaker 1: I think, of course, you know where an industrious country, 412 00:24:59,560 --> 00:25:02,440 Speaker 1: we have a lot financial services sector. There's a tremendous 413 00:25:02,440 --> 00:25:07,280 Speaker 1: amount of talent, human capital, ingenuity, innovation in London and 414 00:25:07,440 --> 00:25:10,000 Speaker 1: in this country more broadly, of course I would continue, 415 00:25:10,200 --> 00:25:13,600 Speaker 1: but nearly the EU via v the EU institution in 416 00:25:13,680 --> 00:25:15,480 Speaker 1: terms of our trade with your fight think there we 417 00:25:15,480 --> 00:25:29,840 Speaker 1: would suffer. This has been brilliant. Thank you. Our goal 418 00:25:30,160 --> 00:25:33,440 Speaker 1: is to be balanced. We thank retailer Rachel Worstbanner entire 419 00:25:33,480 --> 00:25:38,160 Speaker 1: team for killing themselves to give you a good perspective 420 00:25:38,200 --> 00:25:44,119 Speaker 1: of remain and leave. He has been exceptionally articulate for 421 00:25:44,240 --> 00:25:48,359 Speaker 1: the Leave campaign. John Longworth, associated with the Chamber of 422 00:25:48,359 --> 00:25:53,560 Speaker 1: Commerce of this nation and associated with entrepreneurship has given 423 00:25:53,600 --> 00:25:57,440 Speaker 1: us perspective and joins us again. John, good morning. What 424 00:25:57,480 --> 00:26:00,600 Speaker 1: did you wake up thinking about today? What was your 425 00:26:01,240 --> 00:26:05,280 Speaker 1: Leave to do list? Your action plan for these final 426 00:26:05,359 --> 00:26:10,280 Speaker 1: twenty four hours. Well, clearly the Leave campaign will be 427 00:26:10,320 --> 00:26:14,919 Speaker 1: focusing on getting out the vote for the Leaf people, 428 00:26:15,920 --> 00:26:18,440 Speaker 1: focusing on the various ways and that can be done. 429 00:26:18,640 --> 00:26:24,320 Speaker 1: I'm personally focusing on media and many of my business 430 00:26:24,320 --> 00:26:30,120 Speaker 1: associates within the Leave campaigner out literally campaigning on doorsteps 431 00:26:30,119 --> 00:26:33,320 Speaker 1: around the country. Is this We're We're at the point 432 00:26:33,320 --> 00:26:36,520 Speaker 1: I would imagine where you're not really hoping to convince 433 00:26:36,640 --> 00:26:38,959 Speaker 1: anybody because people have made up their mind, but the 434 00:26:38,960 --> 00:26:41,640 Speaker 1: important thing is to make sure they do get out 435 00:26:41,680 --> 00:26:46,560 Speaker 1: and vote. Yeah, I mean there are still reported quiet 436 00:26:46,640 --> 00:26:51,280 Speaker 1: high levels of people who haven't made up their mind. 437 00:26:51,320 --> 00:26:53,920 Speaker 1: In fact, I gave a speech to a very large 438 00:26:53,960 --> 00:26:58,800 Speaker 1: conference of financial advisors yesterday. The audience consisted of nearly 439 00:26:58,840 --> 00:27:01,480 Speaker 1: three people and when I asked for a show of 440 00:27:01,560 --> 00:27:05,399 Speaker 1: hands who has not decided, a very significant number of 441 00:27:05,400 --> 00:27:08,320 Speaker 1: people put up the hands. So it is still important 442 00:27:08,320 --> 00:27:11,000 Speaker 1: to communicate with the people who haven't decided. But for 443 00:27:11,080 --> 00:27:14,760 Speaker 1: the campaigns. Clearly getting the votes out of those who 444 00:27:14,800 --> 00:27:19,479 Speaker 1: have is more important. In Mike Stunning yesterday, Charles Duma 445 00:27:19,640 --> 00:27:23,400 Speaker 1: of Lombard Street Research was heated that he's undecided. Well, 446 00:27:23,400 --> 00:27:27,199 Speaker 1: I'm wondering what you're finding in MS. What is the 447 00:27:27,240 --> 00:27:31,440 Speaker 1: most successful argument you're finding for the leaves side? There 448 00:27:31,440 --> 00:27:37,360 Speaker 1: are many different economic analyzes and you know which one 449 00:27:37,440 --> 00:27:39,600 Speaker 1: if you're if you're not an economist, which one do 450 00:27:39,640 --> 00:27:41,280 Speaker 1: you want to believe? You know, how do you make 451 00:27:41,320 --> 00:27:45,200 Speaker 1: that decision? So what do you what do you try 452 00:27:45,240 --> 00:27:49,000 Speaker 1: to sell people on? Well, you're absolutely right, of course, 453 00:27:49,000 --> 00:27:52,840 Speaker 1: has been a plethora of information from all the various 454 00:27:52,920 --> 00:27:58,199 Speaker 1: campaigns on the economics, and people generally are confused about that. 455 00:27:58,359 --> 00:28:02,000 Speaker 1: Although I'm very clear that we've made major progress on 456 00:28:02,040 --> 00:28:06,000 Speaker 1: the economic arguments. Linton Crosby reported in the press that 457 00:28:06,119 --> 00:28:09,120 Speaker 1: our ratings on the economic arguments have gone up twenty 458 00:28:09,200 --> 00:28:13,080 Speaker 1: points in only a few weeks and we're very very 459 00:28:13,119 --> 00:28:16,800 Speaker 1: close now to the remains side on the economic arguments. 460 00:28:16,840 --> 00:28:19,000 Speaker 1: But my I say to people simply this. You know, 461 00:28:19,000 --> 00:28:22,240 Speaker 1: as a business person, do I want somebody else to 462 00:28:22,320 --> 00:28:24,639 Speaker 1: run my business or do I want to run my 463 00:28:24,720 --> 00:28:28,960 Speaker 1: business myself? Because that's the choice we're facing. We're facing 464 00:28:29,359 --> 00:28:32,320 Speaker 1: being on the periphery of a Eurozone that will make 465 00:28:32,320 --> 00:28:35,560 Speaker 1: all the decisions, where we will pay the bills, swallow 466 00:28:35,600 --> 00:28:39,640 Speaker 1: the regulations and have no freedom to act. Whereas if 467 00:28:39,680 --> 00:28:42,360 Speaker 1: we take back control of our only economy and our 468 00:28:42,440 --> 00:28:46,200 Speaker 1: on affairs, then we can make the decisions ourselves. And 469 00:28:46,240 --> 00:28:49,520 Speaker 1: in a very uncertain world, it's very important to be flexible. 470 00:28:49,840 --> 00:28:54,280 Speaker 1: How do you respond to John Lord Brown saying the 471 00:28:54,400 --> 00:28:57,720 Speaker 1: United Kingdom is of the story and yet has only 472 00:28:57,760 --> 00:29:02,680 Speaker 1: four of the bureaucrats and Brussels. If you lose this campaign, 473 00:29:03,240 --> 00:29:06,400 Speaker 1: do you want to see more UK bodies in Brussels 474 00:29:06,400 --> 00:29:09,440 Speaker 1: helping the bureaucrats. Well, first of all, we're not going 475 00:29:09,480 --> 00:29:11,680 Speaker 1: to lose the campaign. Britain is going to leave the 476 00:29:11,720 --> 00:29:16,880 Speaker 1: European Union. The second thing, however, is that should should 477 00:29:16,880 --> 00:29:21,040 Speaker 1: we find ourselves in that situation, we will be watching 478 00:29:21,240 --> 00:29:24,480 Speaker 1: and the business community will be watching extremely closely as 479 00:29:24,520 --> 00:29:28,360 Speaker 1: to how the European project develops, because it's undoubtedly a 480 00:29:28,400 --> 00:29:32,360 Speaker 1: political project. I mean that's been admitted openly, was suggested 481 00:29:32,360 --> 00:29:34,720 Speaker 1: by a previous President of the Commission to Law. I 482 00:29:34,800 --> 00:29:37,000 Speaker 1: was on a platform with a previous with the immediate 483 00:29:37,040 --> 00:29:41,080 Speaker 1: previous president of the European Commission, but also only last 484 00:29:41,120 --> 00:29:43,480 Speaker 1: week to put the question to him directly, and it 485 00:29:43,600 --> 00:29:45,960 Speaker 1: was absolutely the case that he said that that was 486 00:29:46,920 --> 00:29:49,440 Speaker 1: that was the case. So as a political project, the 487 00:29:49,480 --> 00:29:52,719 Speaker 1: business community will be watching very closely because the economic 488 00:29:52,920 --> 00:29:57,840 Speaker 1: and business interest come poor second place with this channel. 489 00:29:57,880 --> 00:30:02,120 Speaker 1: Loineworth he is a strong supporter, active supporters, committed time 490 00:30:02,640 --> 00:30:05,880 Speaker 1: and treasure to the Leave campaign. I don't have an 491 00:30:05,920 --> 00:30:09,360 Speaker 1: opinion folks remain or leave. I do have an opinion 492 00:30:09,880 --> 00:30:14,920 Speaker 1: that the best short essay I've seen was in today's 493 00:30:14,960 --> 00:30:18,360 Speaker 1: The Times of London Sir James Dyce and full disclosure, 494 00:30:18,400 --> 00:30:21,720 Speaker 1: I've got one of his vacuum cleaners, John Longworth. Sir 495 00:30:21,800 --> 00:30:27,200 Speaker 1: James was on fire about the ability of British business 496 00:30:27,240 --> 00:30:31,200 Speaker 1: to prosper give it leave help Sir James with his case, 497 00:30:31,560 --> 00:30:34,800 Speaker 1: why will British business do better? Why is the Prime 498 00:30:34,840 --> 00:30:39,320 Speaker 1: Minister wrong? Well, British business is very innovative and when 499 00:30:39,360 --> 00:30:42,680 Speaker 1: we're free of the shackles of the dead carcass which 500 00:30:42,720 --> 00:30:46,160 Speaker 1: is the Eurozone, we will do much better. We'll be 501 00:30:46,200 --> 00:30:49,760 Speaker 1: able to create our own trade deals around the world 502 00:30:50,000 --> 00:30:53,520 Speaker 1: focused on what's important to the UK economy, which we're 503 00:30:53,520 --> 00:30:56,000 Speaker 1: prevented from doing at the moment by the European Union. 504 00:30:56,760 --> 00:31:00,480 Speaker 1: We will be able to invest the money we save. 505 00:31:00,920 --> 00:31:05,240 Speaker 1: Our contributions the membership to the club of the European 506 00:31:05,320 --> 00:31:09,040 Speaker 1: Union is huge. The net contribution alan's worth half a 507 00:31:09,040 --> 00:31:12,160 Speaker 1: percent panum of g d P and the regulatory costs. 508 00:31:12,160 --> 00:31:15,040 Speaker 1: If we just shave off ten percent of the regulatory 509 00:31:15,040 --> 00:31:18,600 Speaker 1: costs estimated by our UK Finance Ministry to be a 510 00:31:18,920 --> 00:31:21,440 Speaker 1: d and twenty five billion pounds a year of cost, 511 00:31:21,560 --> 00:31:25,600 Speaker 1: that's twelve and a half billion of regulatory costs shaved off. 512 00:31:26,200 --> 00:31:30,160 Speaker 1: That overall figure would be another point seven percent peranum 513 00:31:30,200 --> 00:31:33,640 Speaker 1: of GDP growth. The facts matter is that investing our 514 00:31:33,760 --> 00:31:39,000 Speaker 1: savings in the UK economy and boosting the economy, plus 515 00:31:39,040 --> 00:31:41,400 Speaker 1: being able to make trade deals around the world will 516 00:31:41,440 --> 00:31:46,320 Speaker 1: create a major stimulus for the UK. Can you expand 517 00:31:46,360 --> 00:31:49,200 Speaker 1: on the idea of creating trade deals around the world 518 00:31:49,560 --> 00:31:56,760 Speaker 1: in a world that lately politically is quite inhospitable to trade. Yeah. Well, 519 00:31:56,960 --> 00:31:58,640 Speaker 1: that's the first thing to remember, of course, is that 520 00:31:58,720 --> 00:32:03,040 Speaker 1: the Single Market, this so called market of five million 521 00:32:03,080 --> 00:32:05,760 Speaker 1: people in the EU, is a myth. The Single Market 522 00:32:05,840 --> 00:32:10,520 Speaker 1: is a protectionist customers union, so it erects around itself. 523 00:32:10,800 --> 00:32:15,400 Speaker 1: Barriers to trade and the while the terrorists Single Market 524 00:32:15,440 --> 00:32:18,520 Speaker 1: apply on average are only three point six percent, in 525 00:32:18,640 --> 00:32:22,080 Speaker 1: some areas that are important to the UK inflation and 526 00:32:22,160 --> 00:32:25,080 Speaker 1: cost structure, they're very high. So for example, in food 527 00:32:25,440 --> 00:32:28,720 Speaker 1: the average chariff is and in some cases up to 528 00:32:28,800 --> 00:32:32,360 Speaker 1: fift and in clothing and footware is ten percent and 529 00:32:32,400 --> 00:32:36,040 Speaker 1: in some cases higher. If we're able to remove those tariffs, 530 00:32:36,240 --> 00:32:38,960 Speaker 1: then we'll be able to get cheaper imports, which will 531 00:32:39,040 --> 00:32:42,200 Speaker 1: have a demo pressure on inflation and help working people 532 00:32:42,360 --> 00:32:46,680 Speaker 1: and actually stimulate the economy. This market, so called market, 533 00:32:46,720 --> 00:32:49,760 Speaker 1: of course of pound a million people, is actually irrelevant 534 00:32:49,800 --> 00:32:51,480 Speaker 1: other than the fact that it holds US back in 535 00:32:51,520 --> 00:32:54,440 Speaker 1: the way I've just suggested. Most trade in the world 536 00:32:54,720 --> 00:32:58,160 Speaker 1: takes place without any trade arrangements whatsoever. All the goods 537 00:32:58,200 --> 00:33:00,640 Speaker 1: that China sells to the European Union they sell to 538 00:33:00,720 --> 00:33:04,120 Speaker 1: us without any trade arrangements. We have a trade surplus 539 00:33:04,120 --> 00:33:07,160 Speaker 1: with the United States in services that's nearly twice as 540 00:33:07,240 --> 00:33:09,720 Speaker 1: large as the as the trade surplus we have in 541 00:33:09,800 --> 00:33:13,040 Speaker 1: services with the European Union. And yet the United States 542 00:33:13,120 --> 00:33:15,120 Speaker 1: is not member and not a member of the European 543 00:33:15,200 --> 00:33:17,760 Speaker 1: Single Market, nor do we have a trade arrangement with 544 00:33:17,800 --> 00:33:21,320 Speaker 1: the United States. So trade goes on between businesses and people. 545 00:33:21,640 --> 00:33:24,080 Speaker 1: Governments just get in the way. They do not trade. 546 00:33:24,640 --> 00:33:29,240 Speaker 1: So actually the trade deals are in some senses only 547 00:33:29,280 --> 00:33:32,160 Speaker 1: oiling the wheels. But it would be helpful, it's helpful 548 00:33:32,200 --> 00:33:34,840 Speaker 1: to have trade arrangements around the world. At the moment, 549 00:33:34,880 --> 00:33:38,880 Speaker 1: the European Union prevents us from doing that. Another question 550 00:33:38,880 --> 00:33:42,720 Speaker 1: that arises, and I'm curious about your feelings about this, 551 00:33:42,840 --> 00:33:45,160 Speaker 1: is you know, we are in America, look to the 552 00:33:45,280 --> 00:33:50,640 Speaker 1: United Kingdom, Northern Ireland, Scotland, Wales and England, and there 553 00:33:50,760 --> 00:33:53,760 Speaker 1: is a lot of talk of a dissolution of the 554 00:33:53,880 --> 00:33:58,680 Speaker 1: Kingdom of Europhiles in Scotland and Wales and Northern Ireland 555 00:33:59,040 --> 00:34:02,720 Speaker 1: should want to mean affiliated with the EU. Well, I 556 00:34:02,720 --> 00:34:04,520 Speaker 1: think that's just not going to happen. I mean, we 557 00:34:04,560 --> 00:34:09,320 Speaker 1: had a referendum in Scotland. The setting up of a referendum, 558 00:34:09,320 --> 00:34:12,080 Speaker 1: of course, is a decision for the Westminster Parliament in 559 00:34:12,600 --> 00:34:16,839 Speaker 1: the UK, not for the Scottish Parliament. We had a referendum. 560 00:34:17,040 --> 00:34:21,280 Speaker 1: The referendum voted to remain within the Union. The Scottish 561 00:34:21,360 --> 00:34:25,400 Speaker 1: Nationalist Party is in a minority now within the Scottish Parliament. 562 00:34:26,080 --> 00:34:29,239 Speaker 1: And actually the luxury of having a referendum on the 563 00:34:29,239 --> 00:34:33,520 Speaker 1: European on the United Kingdom question was really only available 564 00:34:33,520 --> 00:34:36,279 Speaker 1: to Scotland because we were members of the European Union. 565 00:34:36,520 --> 00:34:39,280 Speaker 1: If we're not members of the European Union, particularly bearing 566 00:34:39,320 --> 00:34:44,400 Speaker 1: in mind the downturn in oil prices which the Scottish 567 00:34:44,719 --> 00:34:47,680 Speaker 1: economy is very dependent on, that the likeli of a 568 00:34:47,760 --> 00:34:50,959 Speaker 1: referendum in relation to the United Kingdom is very low 569 00:34:51,160 --> 00:34:54,960 Speaker 1: if we leave the European Union. John, thank you so much. 570 00:34:55,000 --> 00:34:57,520 Speaker 1: Your time has been very valuable to us Channel Aneworth. 571 00:35:00,400 --> 00:35:04,440 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 572 00:35:04,560 --> 00:35:10,000 Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform 573 00:35:10,080 --> 00:35:14,200 Speaker 1: you prefer. I'm on Twitter at Tom Keane, Michael McKee 574 00:35:14,239 --> 00:35:17,799 Speaker 1: is at Economy. Before the podcast, you can always catch 575 00:35:17,880 --> 00:35:20,440 Speaker 1: us worldwide. I'm Bloomberg Radio.