WEBVTT - Surveillance Special from Westminster Green 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Term Keene, Jay Lee. 0:00:13.960 --> 0:00:16.960 We bring you insight from the best in economics, finance, 0:00:17.040 --> 0:00:23.480 investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.720 Bloomberg dot Com and of course on the Bloomberg. Joining 0:00:27.800 --> 0:00:30.360 us here in Westminster alongside Tom Keene and might sap 0:00:30.440 --> 0:00:32.680 Jonathan Farin pleased to say its Adam Wager from the 0:00:32.760 --> 0:00:36.760 UK in a changing Europe alongside try to greet them Ellen, 0:00:36.800 --> 0:00:39.720 let's talk about it fast forward to We need to 0:00:39.800 --> 0:00:41.479 understand and try and get a little bit of clarity 0:00:41.479 --> 0:00:43.360 of what the Prime Minister wants, and I think Boris 0:00:43.400 --> 0:00:45.680 Johnson knows what he wants. I think we managed to 0:00:45.720 --> 0:00:47.680 get to this stage. We had a Breaston election without 0:00:47.680 --> 0:00:51.040 really interrogating whether Boris Johnson would try and extend the 0:00:51.040 --> 0:00:53.960 transition period beyond whether he would try and go for 0:00:54.000 --> 0:00:56.840 a sort of bare bones free and a manifesto, isn't it. 0:00:56.840 --> 0:00:58.520 He's not gonna extends though, but he's got a huge 0:00:58.560 --> 0:01:01.200 round of political capital now and I think he it's possible, 0:01:01.240 --> 0:01:02.920 and I think people in this party are saying that 0:01:02.960 --> 0:01:05.800 he could just sort of forget about that manifesto commitment 0:01:05.920 --> 0:01:08.360 when it gets to June, say you're going to say 0:01:08.360 --> 0:01:10.319 that the EU are being intransident and try and push 0:01:10.360 --> 0:01:12.840 that a transition period back a couple of years, and 0:01:12.840 --> 0:01:14.120 I think that would give him a lot of scope 0:01:14.120 --> 0:01:16.440 for maneuver. That's the option that's open to him, and 0:01:16.440 --> 0:01:18.080 there's other or not. He will, he'll, he'll do that. 0:01:18.360 --> 0:01:21.479 Boris Johnson is a very flexible and adaptable politician. That's 0:01:21.520 --> 0:01:23.759 his key to his strength. Well, which Boris will show 0:01:23.840 --> 0:01:25.280 up that's so hard at the matter and me into 0:01:25.400 --> 0:01:28.960 changing Europe. It's all sort of changing Boris, isn't it. Yeah? Yeah, yeah, 0:01:29.240 --> 0:01:31.000 I think why? I think I think that Boris Johnson 0:01:31.080 --> 0:01:33.919 at heart is someone that probably would like to flip 0:01:33.959 --> 0:01:37.679 back towards sort of one nation sender ground. But it's 0:01:37.680 --> 0:01:41.520 not one. I mean, he got Christians, Scotland, Northern Ireland 0:01:41.680 --> 0:01:45.560 is shockingly unique this morning. It is not one nation, 0:01:45.720 --> 0:01:48.320 isn't Yeah? I mean it Boris Shohnson had any strategy 0:01:48.360 --> 0:01:50.000 and spend the next couple of years really focusing on 0:01:50.120 --> 0:01:52.880 uniting the United Kingdom because the only thing that could 0:01:53.560 --> 0:01:56.240 they could really really derail Boris Johnson in the next 0:01:56.360 --> 0:01:59.640 five years is another independence referinum in Scotland and losing that, 0:01:59.680 --> 0:02:01.600 I mean his position then would be untenable. That's the 0:02:01.640 --> 0:02:04.559 only thing that can actually, you know, stop a five 0:02:04.640 --> 0:02:09.119 years of strong Boris shots in government. Now, sta let's 0:02:09.120 --> 0:02:11.600 talk about the Frice action, Sterling bid, the pounds, stronger 0:02:11.720 --> 0:02:15.040 utilities really really ripping higher here in the United Kingdom. 0:02:15.040 --> 0:02:16.680 When he talked about the mid caps, the banks as 0:02:16.720 --> 0:02:19.160 well in the UK too. The perception over the last 0:02:19.200 --> 0:02:21.320 three years, Trevor and I wonder if you share it, 0:02:21.360 --> 0:02:23.120 is that there is this wall of capital waited to 0:02:23.160 --> 0:02:25.560 come back into the UK once we resolve some of 0:02:25.560 --> 0:02:28.120 these issues. Have we resolved those issues to the extent 0:02:28.160 --> 0:02:31.560 that waller capital starts to come back into the UK. Well, 0:02:31.800 --> 0:02:33.600 I think you've you've seen the pound move up and 0:02:34.080 --> 0:02:36.799 moved up about two percent last night on the exit poll. 0:02:36.880 --> 0:02:38.680 It's given up half of those games already. It's not 0:02:38.680 --> 0:02:40.400 a very big move, so you can take from that, 0:02:40.600 --> 0:02:43.200 but the markets were expecting a Johnson majority, if not 0:02:43.280 --> 0:02:45.960 this big. I think that there will be money coming 0:02:45.960 --> 0:02:49.399 back in, but I think the degree of that investment 0:02:49.440 --> 0:02:52.160 pickup is going to be limited. This is the heart 0:02:52.200 --> 0:02:54.760 of the matter. Trevor, You've been doing this for years, 0:02:54.800 --> 0:02:57.799 not only applying a wealth management and asset on occasion, 0:02:58.160 --> 0:03:02.239 but thinking about where money clothes. How do you flow 0:03:02.360 --> 0:03:06.000 money to the labor areas of this nation that just 0:03:06.200 --> 0:03:09.760 voted for Boris Charlton. What's the mechanism to do that 0:03:10.040 --> 0:03:13.240 fiscal policy because obviously, if we do go out with 0:03:13.320 --> 0:03:15.520 a sort of bare bones trade deal at the end 0:03:15.520 --> 0:03:17.959 of next year, if Johnson wants to get that behind 0:03:18.040 --> 0:03:19.880 him so you can move on to other things, he's 0:03:19.880 --> 0:03:24.600 going to have to oil the system. Okay, what is 0:03:24.639 --> 0:03:31.080 the fiscal policy that helps life. You've got to have 0:03:31.120 --> 0:03:34.600 increased government spending. You've got to have maybe targeted tax cuts. 0:03:35.080 --> 0:03:36.600 I think we've We've just learned that all of the 0:03:37.520 --> 0:03:40.800 parties were splurging the cash in their manifestoes and the 0:03:40.840 --> 0:03:44.040 guilt market didn't blink. So there's much more capacity for 0:03:44.080 --> 0:03:46.880 borrowing and spending the beach. First, the Conservative Party has 0:03:46.960 --> 0:03:50.240 has a news consistituously that they didn't have for much 0:03:50.240 --> 0:03:52.360 of the last part years. I mean we're talking about parts, 0:03:52.440 --> 0:03:54.880 we're talking about instituencies, Tom but for much of the 0:03:54.960 --> 0:03:59.120 last century, the Conservative Party were never in and now 0:03:59.160 --> 0:04:00.840 they are. I'm going to the three of you because 0:04:00.840 --> 0:04:04.520 I'm the foreigner here. Trillion dollar deficits. There's no one 0:04:04.560 --> 0:04:07.240 who's a deficit park in Washington. Is that what we're 0:04:07.240 --> 0:04:09.400 gonna see here? And you may they're not going to 0:04:09.480 --> 0:04:12.120 get the trillion, But is it bull Well, the guilt 0:04:12.120 --> 0:04:14.560 market is not there, twether should it be? Well? I mean, 0:04:14.600 --> 0:04:17.120 in the end, the guilt market will respond more to 0:04:17.720 --> 0:04:21.960 inflation expectations and interest rate expectations. And because China is 0:04:22.000 --> 0:04:24.920 going through the structural slowdown in the background, you can't 0:04:24.920 --> 0:04:27.440 get a good inflation going and at the moment governments 0:04:27.480 --> 0:04:29.840 can load up on debt. If China comes firing back, 0:04:30.200 --> 0:04:33.799 commodity prices arising, inflation goes up, then there's a reckoning. 0:04:34.000 --> 0:04:36.640 I think the question is whether or not Bishton tries 0:04:36.680 --> 0:04:38.920 to square the circle he's got with his political coalition 0:04:38.960 --> 0:04:41.400 now by going down the economic route and trying to 0:04:41.400 --> 0:04:43.120 you know, give some some of tach release and so on, 0:04:43.400 --> 0:04:44.960 whether he just tries to double down on the on 0:04:45.000 --> 0:04:48.160 the social populism that he's that he's won this election. Yeah, 0:04:48.200 --> 0:04:50.040 maybe that's the way they've actually continued let's come back 0:04:50.279 --> 0:04:52.400 and I want to come back and advanced that point forward. 0:04:52.480 --> 0:04:55.920 Ellen Wager with US researcher at the United Kingdom UK 0:04:56.080 --> 0:05:01.360 and Changing Europe. Trevor Grifton with US Royal London Asset Manager, 0:05:16.000 --> 0:05:19.080 Rosalind Matheson with us running all of our government coverage. 0:05:19.200 --> 0:05:23.560 Ben Ritchie of averaging standard stuffed by this morning as well, Rosin. 0:05:23.640 --> 0:05:27.160 The fiscal stimulus to me is key, is it immediate? Urgent? 0:05:27.360 --> 0:05:29.520 Is it? Does it wait six weeks and there's a 0:05:29.600 --> 0:05:32.440 State of the Union address or he speaks to everyone 0:05:32.480 --> 0:05:35.080 and says this is the budget. When does the budget 0:05:35.200 --> 0:05:38.479 get clarity? Expecting that obviously in the early part of 0:05:38.560 --> 0:05:40.640 next year. The first thing is to get Brexit through 0:05:40.640 --> 0:05:42.720 Parliament and then he needs to start talking some numbers 0:05:42.720 --> 0:05:44.479 for his own budget. But a lot of that you 0:05:44.480 --> 0:05:46.919 can expect to be put forward, it will say, contingent 0:05:47.040 --> 0:05:50.120 on X y Z happening with Brexit with the EU. 0:05:50.240 --> 0:05:51.960 A lot of the money has to come in to 0:05:52.080 --> 0:05:54.000 fund some of that, including on the health service. It 0:05:54.080 --> 0:05:56.320 wasn't just labor saying when you used that money from 0:05:56.320 --> 0:05:58.120 Brussels to pay for some of the stuff. It was 0:05:58.160 --> 0:06:00.200 the government as Well's the other thing but got to 0:06:00.200 --> 0:06:03.160 think about is something that never touched on what does 0:06:03.440 --> 0:06:05.720 the cabinet look like in the coming weeks, how does 0:06:05.720 --> 0:06:07.600 it change. On top of that, the Governor of the 0:06:07.600 --> 0:06:09.400 Bank of England leaves around the same time the UK 0:06:09.560 --> 0:06:12.799 leaves the EU at the January next year. Any idea 0:06:12.839 --> 0:06:14.880 how these kind of issues materialized in the coming days, 0:06:14.920 --> 0:06:17.520 coming weeks, We will be interesting to see how cabinet 0:06:17.520 --> 0:06:19.360 may move our ship. But to be honest, he already 0:06:19.360 --> 0:06:22.279 had most of his die hard supporters in there. Remember 0:06:22.279 --> 0:06:25.320 when he removed thereason may form a bit of a word. 0:06:25.800 --> 0:06:28.200 He essentially fired a bunch of Tories who thought were 0:06:28.200 --> 0:06:31.119 against him and they sat in Parliament as independence until 0:06:31.200 --> 0:06:34.240 yesterday until the election, so he rewarded. He's in a 0:06:34.279 --> 0:06:37.240 circle those with very much hard brexiteers from the far 0:06:37.360 --> 0:06:39.400 right of the party. But there are also some of 0:06:39.480 --> 0:06:42.480 his closest confidence So you may not expect see cabinet 0:06:42.520 --> 0:06:44.720 move all shift that much. To be honest, this early 0:06:44.800 --> 0:06:46.839 in the game. Ben overnight, when we caught up with 0:06:46.880 --> 0:06:49.680 people in the FX market talking about what comes next 0:06:49.720 --> 0:06:53.760 in the rate cup, call came up pretty quickly. The 0:06:53.760 --> 0:06:56.000 Bank of England has got seventy five basis points to 0:06:56.040 --> 0:06:59.039 play with. Do they follow through on a cut anytime soon. Well, 0:06:59.040 --> 0:07:01.240 I don't think so. I think after I think after yesterday, 0:07:01.320 --> 0:07:03.159 we've put a lot of more stability. I think that 0:07:03.200 --> 0:07:04.440 the Bank of Being that made a fairly clear at 0:07:04.440 --> 0:07:06.240 their latest update that they were sort of on a 0:07:06.240 --> 0:07:08.520 waiting brief and if anything, I suspect we're probably going 0:07:08.560 --> 0:07:10.360 to be talking about rates going up rather than going 0:07:10.360 --> 0:07:13.040 down from here. The Bank of England, I guess plays 0:07:13.040 --> 0:07:15.400 a part, But it comes down to that analysis of 0:07:15.480 --> 0:07:18.880 fiscal space. Rosalind and a team are written endless articles 0:07:18.920 --> 0:07:22.920 about this nation, this nation frame, the fiscal space of 0:07:23.000 --> 0:07:25.040 the United Kingdom right now. Well, I think it all 0:07:25.080 --> 0:07:27.000 comes down to market confidence at the end of the 0:07:27.080 --> 0:07:29.360 daytime and I think if the paper issuing, I think 0:07:29.360 --> 0:07:31.400 that's the key thing. And I think expectations have changed, 0:07:31.440 --> 0:07:33.720 and so the ability to run a deficit of one 0:07:33.760 --> 0:07:35.840 to percent something like that, which we which we've been 0:07:35.880 --> 0:07:38.320 shooting for in recent years, has probably widened. And I 0:07:38.360 --> 0:07:40.600 think the capacity of bond markets and debt markets to 0:07:40.680 --> 0:07:42.960 take that has expanded. And I think there's an appetite 0:07:42.960 --> 0:07:45.560 to see fiscal stimulus from governments and from investors to 0:07:45.560 --> 0:07:47.760 see that as a responsible action. It's opposed to an 0:07:47.760 --> 0:07:49.720 irresponsible one, and I think that shifted, and I think 0:07:49.720 --> 0:07:52.040 that gives government more flexibility and the room from here. 0:07:52.120 --> 0:07:53.720 The United States is proof that you can do that 0:07:53.960 --> 0:07:55.800 in a big way. Is that the privilege of the 0:07:55.840 --> 0:07:58.360 United States or can the UK follow suit? Well? I 0:07:58.360 --> 0:08:00.400 think the UK one of the remarkable of things. I 0:08:00.400 --> 0:08:03.040 think throughout the whole Brexits you've got saga has been 0:08:03.080 --> 0:08:05.960 the UK bonniels have remained so low and no stage 0:08:05.960 --> 0:08:07.880 has been the concern that inflation is going to rip, 0:08:07.920 --> 0:08:10.000 that confidence is going to be lost. And I think 0:08:10.000 --> 0:08:12.679 with you know, UK TENUA guilts at sevent basis points, 0:08:12.880 --> 0:08:14.640 I think the market saying, yes, we do have episode 0:08:14.640 --> 0:08:16.440 for the UK paper. Sure we might not have the 0:08:16.480 --> 0:08:19.080 extortionate privilege of the United States, but we're still a 0:08:19.120 --> 0:08:21.200 well regarded issue and so I would expect that the 0:08:21.240 --> 0:08:23.080 government to look to take advantage of that, because this 0:08:23.120 --> 0:08:24.760 conservative government is not going to want to put up 0:08:24.760 --> 0:08:26.520 taxes any more than they can do, and so I 0:08:26.520 --> 0:08:28.760 think borrowing is going to be the way forward for them. Glass. 0:08:28.960 --> 0:08:31.240 Let me ask you a treasure Raphael question. I'm sure 0:08:31.240 --> 0:08:34.920 i'll get you in trouble. Is it an existential crisis 0:08:35.200 --> 0:08:39.280 for the United Kingdom that they've come this far, now 0:08:39.360 --> 0:08:42.959 they've got to go forward and they have to forget austerity. 0:08:43.440 --> 0:08:49.040 Is society here lucked psychologically into austerity or can they 0:08:49.080 --> 0:08:52.720 actually wound the stimulus? Can they mentally get there? We 0:08:52.760 --> 0:08:55.680 did see the reason, for example, acknowledge that the austerity, 0:08:55.720 --> 0:08:57.800 even though she was a big champion of austerity, was 0:08:57.880 --> 0:09:01.040 perhaps something that voters had felt have been taken too far. 0:09:01.200 --> 0:09:03.800 And you've seen that with just waiting times at hospitals. 0:09:03.800 --> 0:09:07.280 We saw in a very powerful way during the campaign itself. 0:09:07.360 --> 0:09:11.880 You've seen questions around jobs, around crime, around education as 0:09:11.880 --> 0:09:14.080 a whole, and there's a feeling that yes, perhaps there 0:09:14.080 --> 0:09:16.360 had to be a bit careful, particularly through this very 0:09:16.559 --> 0:09:19.600 long and protracted on certain period when Brexit was being 0:09:19.600 --> 0:09:22.559 debated within the UK. But if we get to the 0:09:22.600 --> 0:09:25.480 point that Brexit is happening, perhaps that creates a certainty 0:09:25.520 --> 0:09:27.960 to have more of a discussion around spending on some 0:09:28.000 --> 0:09:31.280 of these key areas, and certainly the labor voters who 0:09:31.280 --> 0:09:33.480 swung behind Boris Johnson last that we'll be expecting it 0:09:33.679 --> 0:09:35.760 before we move this conversation on to other issues. Just 0:09:35.800 --> 0:09:37.920 getting some reporting around the Bank of England, according to 0:09:37.960 --> 0:09:40.160 officials that the new Bank of England governor will not 0:09:40.200 --> 0:09:43.679 be named this coming Friday. This coming Friday, as in today, 0:09:43.720 --> 0:09:45.240 I've lost track of where we have been up all 0:09:45.360 --> 0:09:48.720 night to UK government officials discussing the timing of that appointment. 0:09:48.760 --> 0:09:51.880 We won't find out today. Will it be a different 0:09:52.000 --> 0:09:55.600 Bank of England official with the size of the Can 0:09:55.640 --> 0:09:57.079 you wonder if we're going to have an official that 0:09:57.160 --> 0:10:01.120 believes in Brexit in a way that perhaps Governor Krni, 0:10:01.200 --> 0:10:04.120 at least he's accused of does not. General adliance for 0:10:04.120 --> 0:10:06.160 instances have been name. It has been a name circulating 0:10:06.160 --> 0:10:07.760 in the city used to be the chief economists that 0:10:07.800 --> 0:10:09.959 standard charted. So that's something to think about as well. 0:10:10.040 --> 0:10:11.520 I think, for instance, stance for us just taking a 0:10:11.559 --> 0:10:14.760 step back for a moment, equities rolling over the deal 0:10:14.840 --> 0:10:17.640 between China and the United States in doubt. We've heard 0:10:17.640 --> 0:10:20.080 from the U s side, just briefly the reporting suggesting 0:10:20.080 --> 0:10:21.880 that the President is signed off on a proposal with 0:10:21.920 --> 0:10:24.800 the Chinese, but at the moment very little. Welcome all 0:10:24.800 --> 0:10:27.680 of you on Bloomberg Television and Bloomberg Radio, roseland Myths 0:10:27.679 --> 0:10:30.920 and with us with Bloomberg News and working in international 0:10:30.960 --> 0:10:34.320 and government leadership there in ben Ritchie where us as 0:10:34.320 --> 0:10:38.720 well with everything standard investment, Do you change anything? Are 0:10:38.720 --> 0:10:41.120 you going to write a twenty page note or read 0:10:41.120 --> 0:10:44.160 a twenty page note that's going to foreshoot a change 0:10:44.280 --> 0:10:46.960 of the selection. Well, I think it's the combination of 0:10:47.000 --> 0:10:49.560 trade and the election. They're removed two of the bigger 0:10:49.600 --> 0:10:52.120 issues that have hung over European equities for most of 0:10:52.120 --> 0:10:54.160 the last couple of years. And so I think if 0:10:54.200 --> 0:10:56.160 we are an environment where we have a Phase one deal, 0:10:56.240 --> 0:10:59.000 whatever that actually means, but we reduce hostilities and the 0:10:59.120 --> 0:11:01.600 perception of stability see and we take away Brexit as 0:11:01.600 --> 0:11:04.400 a potential sort of cliff edge issue. And we also 0:11:04.440 --> 0:11:07.800 start to see more governments across Europe move into fiscal expansion. 0:11:08.040 --> 0:11:10.200 That's creating an environment that's going to be positive at 0:11:10.240 --> 0:11:12.880 least for investor sentiment towards European equities, which has been 0:11:12.880 --> 0:11:14.560 pretty dreadful for most of the last two year. And 0:11:14.600 --> 0:11:16.760 assuming that we actually sort things out between the United 0:11:16.800 --> 0:11:18.839 States and China, we're just hearing from the Global Times 0:11:18.880 --> 0:11:22.520 reporting that China will hold a press briefing today entrade talks. 0:11:23.000 --> 0:11:25.840 We don't know where things are at all. In fact, 0:11:25.880 --> 0:11:28.720 for many people, the last twenty four hours was reerily 0:11:28.800 --> 0:11:31.680 similar to October eleventh. We're told we've got an agreement, 0:11:31.880 --> 0:11:34.120 we don't have the details around it. It's a little 0:11:34.160 --> 0:11:36.440 bit too premature to say the coast is clear for 0:11:36.559 --> 0:11:39.120 risk assets going into next year when we've got nothing 0:11:39.120 --> 0:11:41.160 on paper whatsoever. But I think we want to see 0:11:41.160 --> 0:11:43.680 the deal agreed again. I think the contents of the 0:11:43.679 --> 0:11:45.560 deal are less relevant than that there is a deal 0:11:45.600 --> 0:11:47.800 for market sentiment. I think that that there whereas and 0:11:47.880 --> 0:11:50.680 what's of how much agricultural purchases, what they extend to, 0:11:50.920 --> 0:11:53.720 what the protections are in around technology and patterns are 0:11:53.720 --> 0:11:55.400 not so important as the fact that the agreement has 0:11:55.440 --> 0:11:57.720 reached and that some degree of confidence can be restored 0:11:57.760 --> 0:11:59.760 to corporate It's in a degreement. Just once slice though, 0:11:59.760 --> 0:12:01.760 of a broader issue between China and the United States. 0:12:01.840 --> 0:12:03.520 Let's look at what's happening at the moment over the 0:12:03.600 --> 0:12:06.160 last two weeks alone. But one thing, one of the 0:12:06.200 --> 0:12:08.720 few things that is agreed upon in DC right now 0:12:08.760 --> 0:12:11.800 between Democrats and Republicans is a hard stance on China. 0:12:12.240 --> 0:12:13.839 You can see right now for the Chinese in the 0:12:13.920 --> 0:12:17.400 past week alone, decoupling of supply chains is something not 0:12:17.520 --> 0:12:21.319 only happening, they're actively encouraging in China and the United States. 0:12:21.520 --> 0:12:23.679 I don't think whatever's agreed on this Phase one deal, 0:12:23.760 --> 0:12:25.280 whatever you want to call it, that we can sit 0:12:25.320 --> 0:12:27.600 here over the last two half months and say we 0:12:27.640 --> 0:12:29.880 have a truce, Do we really have a truce just 0:12:29.960 --> 0:12:32.800 because we agree on buying a little bit more agricultural good. 0:12:32.840 --> 0:12:34.560 I think that, I think that, I think that's absolutely right, 0:12:34.600 --> 0:12:35.959 and it's it's just one part of it of a 0:12:36.040 --> 0:12:38.080 longer frame, and it's likely to be an ongoing rivalry 0:12:38.080 --> 0:12:40.360 that stretches on for for decades from here. But I 0:12:40.360 --> 0:12:42.719 think in terms of the disruption to corporate confidence, to 0:12:42.760 --> 0:12:44.760 corporate investment that we've seen, I think this is an 0:12:44.800 --> 0:12:47.440 important step in trying to ameliorate that does some degree. 0:12:47.800 --> 0:13:02.920 I'm Richie of Aberdeen. We can catch up from Brussels. 0:13:02.960 --> 0:13:07.199 Maria Demetrius, Deputy director of Brugal. She's still could be 0:13:07.280 --> 0:13:09.840 with us and alongside us here in London, Ben Richie 0:13:10.200 --> 0:13:13.440 of Abberdey Standard Investment. Maria, just to come to you initially, 0:13:13.480 --> 0:13:16.360 ignore the sound all around me, the sirens here in London. 0:13:16.760 --> 0:13:20.040 Your thoughts on how Brussels will respond in the coming 0:13:20.120 --> 0:13:23.400 months with a UK British Prime Minister with a much 0:13:23.400 --> 0:13:27.960 bigger majority here in the UK. Well, it was an 0:13:28.000 --> 0:13:32.360 expected result. Actually, this is going to probably mean that 0:13:32.559 --> 0:13:36.120 the Withdoral Agreement will pass. It will be voted in 0:13:36.160 --> 0:13:39.000 the Parliament, which means in itself that we can start 0:13:39.280 --> 0:13:41.760 discussing the future trade deal. That is good news because 0:13:41.760 --> 0:13:43.800 it's going to provide the certainty that the markets need. 0:13:44.000 --> 0:13:46.800 So in that respect, this result is probably a solid 0:13:46.840 --> 0:13:49.240 result in terms of being able to start to think 0:13:49.600 --> 0:13:55.280 about the long term relationship. Maria took Canada WAP seven 0:13:55.320 --> 0:13:58.160 years to come up with an agreement between the Canadians 0:13:58.200 --> 0:14:01.120 and the EU. There's a leaf and I think it's 0:14:01.160 --> 0:14:02.960 well placed that the UK can do it quicker. The 0:14:03.040 --> 0:14:05.360 question how much quicker and what can it deal? Your 0:14:05.360 --> 0:14:07.800 thoughts on a timeline, hire, Maria, How doable is all 0:14:07.840 --> 0:14:12.160 of this? Well, that's a good point. Actually, a typical 0:14:12.240 --> 0:14:14.480 trade deal of if you take any random couple of 0:14:14.520 --> 0:14:16.600 countries that is, trying to strike a trade deal takes 0:14:16.600 --> 0:14:18.400 more on that it takes a little bit more than 0:14:18.440 --> 0:14:21.320 two years. So in that respect, yes, wanting to do 0:14:21.360 --> 0:14:24.240 it everything in one year is rather ambitious. On the 0:14:24.280 --> 0:14:26.600 other hand, so we know exactly what we expect, the 0:14:26.600 --> 0:14:29.960 incentives are aligned. We both want good outcomes. So I 0:14:29.960 --> 0:14:31.760 mean it could if you get your minds to it. 0:14:31.840 --> 0:14:33.560 I think we could do it in less than that. 0:14:33.880 --> 0:14:35.640 If it were to be blocked, there would be blocked 0:14:35.680 --> 0:14:37.600 for administrative issues, and you know, it might take a 0:14:37.600 --> 0:14:40.120 little bit more than that. But in principle, I don't 0:14:40.120 --> 0:14:42.560 think why shouldn't be why you need the seven or 0:14:42.600 --> 0:14:44.880 eight years to strike a de deal, be doing the 0:14:44.920 --> 0:14:49.880 two Yeah, Maria, one of the unspoken things is a 0:14:50.000 --> 0:14:54.520 changing of the guard within European trade leadership. Really talked 0:14:54.520 --> 0:14:59.400 about him from Strasburg back to Brussels as well. Does 0:14:59.440 --> 0:15:05.880 it matter here that their new individuals doing these discussions. No, 0:15:06.000 --> 0:15:08.600 I don't think so. There's pure continuity here. I think 0:15:08.640 --> 0:15:10.440 it would be it would be important to just know 0:15:10.480 --> 0:15:13.520 what the next step is, so you know, first things first, 0:15:13.680 --> 0:15:16.120 let's pass the withdrawal agreement with the majority of that 0:15:16.160 --> 0:15:19.760 Premnister Johnson god yesterday. That probably will happen as soon 0:15:19.800 --> 0:15:22.360 as this. As soon as this happened, then I think 0:15:22.480 --> 0:15:25.160 the continuity will be ensured. Certainly from the EU side, 0:15:25.520 --> 0:15:28.360 the negotiations will still happen by the same people. It 0:15:28.440 --> 0:15:33.240 doesn't really matter that you have a change. God, right, Maria, 0:15:33.280 --> 0:15:35.800 thank you so much for the time this afternoon. Maria 0:15:36.360 --> 0:15:39.920 Demetris is the deputy director of BROGL and we greatly 0:15:39.960 --> 0:15:42.800 thank her and Brussels today with Ben Ritchie in with 0:15:42.920 --> 0:15:45.440 the news for the heapphines really starting to change her 0:15:46.120 --> 0:15:47.840 what we find a goal and I think we knew 0:15:47.840 --> 0:15:50.320 it already. Making trade deals is really difficult. We're talked 0:15:50.360 --> 0:15:52.800 about the United Kingdom and the EU on the timeline 0:15:52.800 --> 0:15:54.280 of what twelve months to try and come up with 0:15:54.280 --> 0:15:56.960 a comprehensive free trade of agreement. Maybe if that's what 0:15:57.000 --> 0:16:00.440 the Prime Minister wants, talk to us about the ficulty 0:16:00.640 --> 0:16:02.800 not with the UK and the EU. The one that's 0:16:02.840 --> 0:16:05.680 moving markets right now, the epicenter of things at the moment, 0:16:06.000 --> 0:16:09.360 China and the United States. A lot of people think 0:16:09.440 --> 0:16:12.160 risk is diminished going into next year. Do you feel 0:16:12.160 --> 0:16:14.680 the same way? Well, I think yes, is the answer. 0:16:14.760 --> 0:16:16.440 But I think we need to see this deal agreed 0:16:16.960 --> 0:16:19.000 in some form. I think, as I said earlier, I 0:16:19.040 --> 0:16:21.240 think the details are less relevant than the deal itself. 0:16:21.600 --> 0:16:23.560 Um and can we see that perhaps by the end 0:16:23.560 --> 0:16:25.520 of the year perhaps earlier in the start of next year. 0:16:25.720 --> 0:16:27.440 Hopefully we can do. And I think that that puts 0:16:27.520 --> 0:16:30.720 us in a reasonable place going forward. We started this 0:16:30.800 --> 0:16:33.840 year worried about the effectiveness of monetary policy. We end 0:16:33.880 --> 0:16:36.240 it feeling very differently about that. It's interesting because we 0:16:36.280 --> 0:16:38.600 haven't seen a real pickup in the economic data worldwide, 0:16:38.600 --> 0:16:40.600 in Europe or An Asia for that matter. I think 0:16:40.600 --> 0:16:43.440 we're defining the effectiveness of monetary policy by what markets 0:16:43.480 --> 0:16:45.360 do ensure. There is a channel into the real economy 0:16:45.360 --> 0:16:48.240 from financial markets, that's clear, But I just wonder when 0:16:48.240 --> 0:16:50.320 the global economy is going to start picking up and 0:16:50.360 --> 0:16:53.440 what kind of recovery we have. Ultimately, Is it You shaped, 0:16:53.720 --> 0:16:56.240 is it Oul shaped? What are you looking for in 0:16:56.280 --> 0:16:58.440 the fundamentals the data in the coming mons. I think 0:16:58.440 --> 0:17:00.240 at the moment we've started to see Tom Lindes of 0:17:00.320 --> 0:17:03.560 improvement in you in European manufacturing data, so we've seen 0:17:03.600 --> 0:17:07.200 stabilization and p M eyes stabilization industrial production. We haven't 0:17:07.240 --> 0:17:09.240 yet seen an inflection upwards, but we but we've seen 0:17:09.280 --> 0:17:12.040 some stabilization in those rates. Um and I guess the U. 0:17:12.080 --> 0:17:14.480 S economy has continued to grow and develop in a 0:17:14.520 --> 0:17:16.400 sort of similar way. To that, which it has done 0:17:16.480 --> 0:17:18.119 for much of the last five or six years. Has 0:17:18.119 --> 0:17:19.800 maybe got a little bit slow around the margins, but 0:17:19.840 --> 0:17:22.120 then we had that very strong jobs parently last week, 0:17:22.160 --> 0:17:25.679 so again it's in that band of be doing okay China. 0:17:25.800 --> 0:17:27.920 I think again the some of the domestic consumption stats 0:17:27.960 --> 0:17:29.920 that continue to be weak and we haven't really seen 0:17:30.280 --> 0:17:34.560 a significant pickup. But I think a stabilization around the 0:17:34.600 --> 0:17:37.200 trade war I think gives the capacity for European manufacturing 0:17:37.240 --> 0:17:40.439 to pick up what Q four we've seen lower for longer, 0:17:40.600 --> 0:17:44.440 established and fixed income everybody's moving out, and also we're 0:17:44.480 --> 0:17:47.720 waiting on international to come in, including an e M market. 0:17:47.800 --> 0:17:50.919 It really didn't happen in the fourth quarter. What does 0:17:50.960 --> 0:17:54.160 the signs you look for every day to link together 0:17:54.680 --> 0:17:58.879 lower for longer with finally em coming up? Well, what 0:17:59.000 --> 0:18:01.200 does what does the sign I want to see out 0:18:01.240 --> 0:18:04.200 to know that's quite dim. Well, I think it's really 0:18:04.200 --> 0:18:05.960 looking to China. I think that's the key, and I 0:18:05.960 --> 0:18:08.159 think if we just gross to I think I think 0:18:08.280 --> 0:18:09.600 I think it's looking at the p M I and 0:18:09.640 --> 0:18:11.680 the manufacturing data there. I think that's probably going to 0:18:11.760 --> 0:18:14.000 be the key lead that starts to drive a lot 0:18:14.000 --> 0:18:15.600 of a lot of the other global economies that are 0:18:15.640 --> 0:18:18.400 the ones that have been struggling over the last sort 0:18:18.400 --> 0:18:20.760 of twelve eighteen months as a result primarily of trade, 0:18:20.760 --> 0:18:22.800 perhaps some other issues in there as well, But that 0:18:22.920 --> 0:18:24.399 that that, to my mind, is that is going to 0:18:24.440 --> 0:18:26.879 be the key sentimental driver for for European What do 0:18:26.920 --> 0:18:28.840 you make of the big debate currently going into next 0:18:28.960 --> 0:18:31.520 year the rest of the world versus say, the United States. 0:18:31.520 --> 0:18:35.159 Overwhelmingly we've got used to a consensus forming looks on 0:18:35.160 --> 0:18:36.920 the other side of the Atlantic sitting in New York 0:18:36.920 --> 0:18:38.879 on Moll Street, that it's by the rest of the 0:18:38.920 --> 0:18:43.080 world in twenty that's the story to get behind, is it. Well, 0:18:43.119 --> 0:18:44.719 I think it's been that story pretty much every year 0:18:44.760 --> 0:18:46.800 for about the last ten years, and that's generally been wrong, right, 0:18:47.320 --> 0:18:48.560