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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,

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Speaker 1: SoundCloud and at Bloomberg dot com. I am thrilled to

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Speaker 1: welcome Ambassador Michael Frohman to the show. He is a

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Speaker 1: Distinguished Fellow at the Council of Foreign Relations and he

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Speaker 1: was President Obama's principal advisor, negotiator, and spokesperson on international

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Speaker 1: trade investment issues. He led the negotiations of the Trans

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Speaker 1: Pacific Partnership and the Transatlantic Trade and Investment Partnership UH.

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Speaker 1: Ambassador Frohman thrilled to have you. Right now, we're hearing

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Speaker 1: a lot about how broken a lot of these trade

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Speaker 1: agreements are. Is there one aspect of NAFTA and some

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Speaker 1: of the other trade agreements that could be tweaked to

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Speaker 1: sort of ameliorate some of the anger? And where do

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Speaker 1: you think it's the anchor is really coming from? Well? Absolutely,

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Speaker 1: I think NAFTA is now twenty three years old, and

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Speaker 1: under President Obama, we sought to renegotiate NAFTA through the

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Speaker 1: Trans Pacific Partnership. Canada and Mexico were members of TPP.

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Speaker 1: Mexico agreed in the context of TPP to have binding

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Speaker 1: and enforceable labor and environmental provisions, which they did not

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Speaker 1: have in in NAFTA. They agreed to open up their

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Speaker 1: energy sector to US participation. They agreed to put disciplines

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Speaker 1: on their state owned companies, They agreed to a whole

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Speaker 1: series of obligations around the digital economy. And similarly Canada.

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Speaker 1: Canada had refused to open up its dairy and poultry

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Speaker 1: markets to US exports in NAFTA, and through t PP,

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Speaker 1: we were able to open up those markets. So there

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Speaker 1: certainly is improvement to be to be had in in

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Speaker 1: in NAFTA. We did that in t p P, and

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Speaker 1: I think the question now is what does the Trump

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Speaker 1: administration seek to do beyond what we did in t

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Speaker 1: p P to to address this. I've heard Secretary Ross

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Speaker 1: has mentioned he wants to talk about the digital economy,

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Speaker 1: about raising UH living standards in Mexico. That's exactly what

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Speaker 1: our labor chapter and our Digital Economy chapter did in TPP,

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Speaker 1: and I think we're all waiting to see what else

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Speaker 1: he wants to do and the administration wants to do

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Speaker 1: that goes beyond that ambassador from and can you give

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Speaker 1: us some details of the nitty gritty of where, when,

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Speaker 1: and how these negotiations take place, and how are they

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Speaker 1: prepared for some of the technical background information that would

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Speaker 1: come with the bureaucracy and the new administration. So Congress

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Speaker 1: passed a law in June of fifteen called Trade Promotion Authority,

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Speaker 1: which lays out a whole series of processes that the

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Speaker 1: administration has to go through before negotiating any trade agreement.

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Speaker 1: And that involves deep consultations with Congress, I think for

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Speaker 1: at least ninety days. It involves reaching out to stakeholders

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Speaker 1: and having public hearings and getting input. And this is

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Speaker 1: the normal process you go through when you negotiate in

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Speaker 1: a trade agreement. So the Trumble administration seems to be

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Speaker 1: beginning that process now, and I think UH Secretary Ross

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Speaker 1: indicated earlier this week on an interview here on Bloomberg

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Speaker 1: that it was going to take some number of months

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Speaker 1: before they would get started actually in renegotiating NAFTA, primarily

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Speaker 1: for that reason, and and that's uh, that's the first

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Speaker 1: step that needs to be done. I think once you

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Speaker 1: get beyond that, and you have a clear sense of

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Speaker 1: what it is you want to put on the table,

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Speaker 1: what the parameters of the negotiation will be. It that

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Speaker 1: involves consultations with with our partners Canada and Mexico to

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Speaker 1: determine whether they are willing to engage on that basis.

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Speaker 1: And of course, as we reopen NAFTA, they may well

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Speaker 1: have their own issues that they want to put on

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Speaker 1: the table. Well, I want to pick up on that point.

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Speaker 1: In particular, there was a story today about how Mexico's

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Speaker 1: sugar industry, which is upset about the idea of possibly

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Speaker 1: being blocked or tariffed taxed by importing sugar into the US,

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Speaker 1: might block imports of American high fructose corn syrupe in retaliation.

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Speaker 1: How concerned are you that relations between Mexico and the

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Speaker 1: US will deteriorate before negotiations even begin and derail any

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Speaker 1: potential to really come up with a beneficial plan. Well,

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Speaker 1: these are there are some longstanding outstanding issues. Sugar with

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Speaker 1: Mexico is one of them. The U s sugar industry

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Speaker 1: brought some actions under our trade remedy laws UH that

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Speaker 1: that kept Mexican sugar out of our market. We negotiate

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Speaker 1: an agreement to settle that. That agreement has been uh

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Speaker 1: fraying at the edges or there's been a lot of

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Speaker 1: pressure on that agreement. And the comments you mentioned reflect

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Speaker 1: the concerns the Mexican sugar producers have, and they've always

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Speaker 1: threatened that if we keep sugar out of our mark

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Speaker 1: their sugar out of our market, they'll keep our fructos

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Speaker 1: out of out of their markets. And so they are

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Speaker 1: a substitute for each other to a certain degree. All

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Speaker 1: that puts a premium on making sure that you're using

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Speaker 1: all the good will that you have with your neighbors,

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Speaker 1: that you're making sure that you're addressing their concerns and

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Speaker 1: it doesn't deteriorate into a trade war, because any of

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Speaker 1: these issues can lead to sanctions and counter sanctions and

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Speaker 1: that's not good for for for any of us. And so,

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Speaker 1: whether it's trigger with Mexico or dairy issues with with Canada,

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Speaker 1: we have outstanding trade issues that need to get addressed.

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Speaker 1: Many of them were addressed in the context of of

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Speaker 1: TPP and going forward, since the administration is determined that

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Speaker 1: it doesn't want to move forward in it with its

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Speaker 1: own participation in TVP. It's going to find it's going

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Speaker 1: to need to find other ways of addressing these outstanding issues.

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Speaker 1: Do you believe that there's any political connection between TPP

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Speaker 1: trade and the rhetoric on trade and the desire for

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Speaker 1: UH commerce Secretary Ross talked about those negotiations. Is there

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Speaker 1: any connection between that and the border wall proposal? Well, look,

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Speaker 1: I think there will be lots of uh PhD dissertations

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Speaker 1: written on this last election and what was what went

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Speaker 1: into the well, just give them your headline, give you

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Speaker 1: about the fifteen seconds. So like, I think that notwithstanding

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Speaker 1: the rather remarkable economic recovery of the last seven years,

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Speaker 1: there are a lot of people who are angry and resentful,

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Speaker 1: and they're seeing the impact on wages and jobs much now.

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Speaker 1: Economists will tell us much of that impact, the vast

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Speaker 1: majority of the impact comes from technology. Some of it

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Speaker 1: comes from globalization. But you don't get to vote on technology,

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Speaker 1: you don't get to vote on globalization. You get to

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Speaker 1: vote on trade agreements, and you get to vote on immigration,

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Speaker 1: and so UH taking action against whether it's foreign governments

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Speaker 1: or foreign immigrants is a bit of a scapegoat for

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Speaker 1: people's understandable economic and securities. They may be the wrong target,

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Speaker 1: they may not be the cause of the problems, but

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Speaker 1: they are a reflection of how angry and anxious people

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Speaker 1: are about their economic well being in the country. Well,

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Speaker 1: I gotta say that is a very diplomatic answer, and

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Speaker 1: I wanted you're a diplomat. Ambassador Michael Frohman, Thank you

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Speaker 1: very much, former US Trade Representative, currently a Distinguished Fellow

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Speaker 1: at the Council on Foreign Relations. We've got the Axel Murk.

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Speaker 1: He is the president and chief investment officer of Murk

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Speaker 1: Investments and Axel. Maybe you could respond to this information

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Speaker 1: and maybe explain how this fits into the context of

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Speaker 1: what the e CBS attempting to do. Well, Yes, him

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Speaker 1: highly Well. I think Mr drag is known to pivot um.

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Speaker 1: Every six months he comes up with a completely new

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Speaker 1: story and and every time he holds the meeting, he

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Speaker 1: gives some positive negatives, and then half a year later

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Speaker 1: he says, see, I told you. I was like, I

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Speaker 1: mentioned all the policies, so I mentioned all the negatives,

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Speaker 1: and so this time around the glass was harful. He

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Speaker 1: said everything is working. Our apolicies are fantastic. And by

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Speaker 1: the way, yep, we are attentive but not anxious about

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Speaker 1: anything that's coming up. Meaning if if things do go

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Speaker 1: bad with the upcoming elections, I'll bail you guys out.

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Speaker 1: And so what I have been arguing, including on your program,

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Speaker 1: is that we've reached the bottom of the interest rate

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Speaker 1: title in Europe and that is not priced in. And

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Speaker 1: we've seen it in the euro, especially last today, how

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Speaker 1: it's been moving higher. And that's exactly that that they

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Speaker 1: are looking at the way how they can get out

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Speaker 1: of this this massive cit they're doing. And and sure

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Speaker 1: enough everything is always too what's been priced in, and

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Speaker 1: the Euro has been moving higher, and even on the

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Speaker 1: back of a good job report. But all I've been

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Speaker 1: weakening today Axcel To that point, what would the market

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Speaker 1: effect be should the ECB start raising rates sooner than

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Speaker 1: is currently being priced in. Well, that that's bound to

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Speaker 1: happen because everything is pricing in that that look, and

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Speaker 1: it's gonna win. That the Dutch is gonna be pulling,

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Speaker 1: They're going to be out of the U or whatever

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Speaker 1: it might be, and there's so much negative news price

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Speaker 1: then there is a price then that that the rates

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Speaker 1: are going to go forever lower, and and there's that

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Speaker 1: they have been an effective not going to go lower.

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Speaker 1: And so what's going to happen in my view is

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Speaker 1: that that the euro is going to strengthen over time.

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Speaker 1: Um and because we we've praked been all these wonderful

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Speaker 1: rate heps in the US. But I think in the

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Speaker 1: US we are far more behind the curvesin in Europe.

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Speaker 1: So but hold on a second, because which assets specifically

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Speaker 1: will sell off the most should the ECB say raise

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Speaker 1: benchmark rates. I don't know before the end of this year,

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Speaker 1: which assets. It's a good question. I mean, in the

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Speaker 1: last two days the German bones have been significantly underperforming.

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Speaker 1: If you're kind of on the micro level, yel freas

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Speaker 1: have been narrowing partially on the backle of drug is

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Speaker 1: saying everything is fine. But in the in the medium term,

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Speaker 1: of course, the problem is that over years there are

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Speaker 1: all all the single banks have been doing. If they've

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Speaker 1: compressed with premium, that means all risk assets are EXPENSI

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Speaker 1: and that means all risk asses may come down. And

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Speaker 1: that is everything from from stocks to to jump bonds

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Speaker 1: and then yes, even on the on the stafer bond set.

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Speaker 1: So I I've been quoted by you guys and saying

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Speaker 1: that I'm negative on both bonds and equities, and that's

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Speaker 1: absolutely right. I just don't see unless we have this

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Speaker 1: gigantic economic growth that we're going to get and get

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Speaker 1: to a normalization without a very serious correction in the

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Speaker 1: nasset prices. And and stocks might be more vulnerable um

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Speaker 1: than than than some other securities are. But but I

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Speaker 1: do think, yes, that both stocks and bondable up. So

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Speaker 1: do you think we're in a credit bubble? Um bubble

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Speaker 1: is a loaded term, but but by all means we

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Speaker 1: have we have been. What what's difference on the credit

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Speaker 1: bubble in two thousand seven is that if it if

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Speaker 1: it were to burst, I don't see necessarily a disorderly

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Speaker 1: collapse as there was a risk in two thousand seven.

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Speaker 1: But that doesn't mean we're not in the bubble. It

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Speaker 1: doesn't mean we cannot have a your correction, and so

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Speaker 1: basically we cannot afford to have high rates. I once

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Speaker 1: talked to a FET official. He has just retired from

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Speaker 1: a regional fete, and I asked him kind of why

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Speaker 1: why is the FET so scared of hiking rates um

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Speaker 1: of of of kind of pushing out surprises down, stock

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Speaker 1: market down, and so well they the FETE is never

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Speaker 1: concerned about it unless they caused the bubble. And then

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Speaker 1: then he paused, meaning that one of the reasons we

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Speaker 1: can't high grade this because we've built this recovery and

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Speaker 1: anceprise inflation. And so if we were to try to

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Speaker 1: get ahead of the curve, we would not just tumble

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Speaker 1: the stock market, but we could cause your economic calm.

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Speaker 1: And that's the other problem we have. We we we

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Speaker 1: we we. The set has become a slave of the market,

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Speaker 1: and it's showing the market knows that. And this is

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Speaker 1: taking the set for a right, so to speak. So

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Speaker 1: Accel's move from Europe and moved to the U S

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Speaker 1: where we just got this job's report. Uh, they gave

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Speaker 1: the market exactly what it what it wanted. And you're

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Speaker 1: seeing traders piled back into risk your assets from stocks

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Speaker 1: to high and some of the assets that you were

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Speaker 1: saying in Europe are inflated by low rate policies. Do

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Speaker 1: you think that this sort of knee jerk Pavlovian response

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Speaker 1: to this goldilocks environment is just simply setting up the

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Speaker 1: market for a bigger fall. When the Fed eventually does

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Speaker 1: start hiking rates faster, Well, it does every time, right,

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Speaker 1: I mean the last time we have the goldilocks economy

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Speaker 1: was in the mid two thousand's, right, that didn't end

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Speaker 1: too well. Now again, I'm not suggesting we're gonna have

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Speaker 1: a two thousand eight sort of collapse again. But but yes,

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Speaker 1: when everything's got great, you should start planning for for

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Speaker 1: the period thereafter, and and and and so that means

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Speaker 1: you pick chips off the table, you're bound to portfolio

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Speaker 1: and then tried to take food and steps, but Alex

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Speaker 1: just to accel, just to sort of take the other

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Speaker 1: side of that. I mean, everyone who has tried to

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Speaker 1: take chips off the table has suffered, right, I Mean

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Speaker 1: it's been and that's why, and that's all the more

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Speaker 1: reasons to do it, right. I Mean, when the I'm

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Speaker 1: one of the few folks who's who's cautioning, and and

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Speaker 1: when when I shut up and stop being cautious about

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Speaker 1: the markets, yes, then definitely sell your portfolio, right, I

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Speaker 1: mean it's the anybody who has been cautious has on

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Speaker 1: the perform You're, as they say, you're the last man

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Speaker 1: in when you go in that's that. Then then we're done.

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Speaker 1: For here. I just wanted when you stop calling me

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Speaker 1: your stocks. There you go, but no here I want

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Speaker 1: I want to before you go, I want you to

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Speaker 1: tell us what do you think about the forget what

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Speaker 1: you want, what we want, anybody wants. Tell me what

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Speaker 1: you believe interest rates will be at the end of

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Speaker 1: twenty seventeen, and go ahead. I'll give you a wild

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Speaker 1: guest for the for any point in two thousand eighteen. Yeah, well,

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Speaker 1: I'll give you the same answer I've given you before

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Speaker 1: when you asked me this question. As whoever will be

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Speaker 1: will be behind the curve. It doesn't matter when normal

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Speaker 1: rightside matters where they are relative to inflation, and the

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Speaker 1: set is should be two should be around two point

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Speaker 1: one percent right now? Possibly possibly possibly that's what tis

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Speaker 1: in but it is depending on the market. If the

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Speaker 1: market is doing great, we'll get higher rates. If the

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Speaker 1: market balls the fit, we're not going to get it.

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Speaker 1: So the market isn't charged yet. If we're gonna have

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Speaker 1: continued rallies in the stock market of bombs are going

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Speaker 1: to behave will continue hiking rates. But if we see

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Speaker 1: trouble because of anything U then you can blame the Chinese,

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Speaker 1: you can blame the frenchise who or Trump whoever it

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Speaker 1: might be. Um, then UM, then the DST expectations will

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Speaker 1: come down. And so I know then exposession is going

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Speaker 1: to come. I know the next PR market is going

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Speaker 1: to come. The time is of course not known. But

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Speaker 1: what we do know is that they said the reason

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Speaker 1: they're there so so so extremely slow and raising rates

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Speaker 1: it because they just don't want to unravel anything. And

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Speaker 1: the problem is, of course in doing so, they're creating

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Speaker 1: more bubbles, and at some point it's going to unravel.

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Speaker 1: And we find that I tell you exactly when that

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Speaker 1: will have happened, Well, we're gonna call you when it happens.

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Speaker 1: Axel Merk, President, chief investment Officer Merk Investments, based in

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Speaker 1: San Francisco, munis in focus with Joe my sec editor

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Speaker 1: Bloomberg Brief Markets. You know, I gotta ask you, Joe.

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Speaker 1: One of the things that we're always talking about is

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Speaker 1: Puerto Rico. But I was noticing that there are a

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Speaker 1: lot more problems in the MUNI market than just Puerto Rico.

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Speaker 1: Can you give us sort of the bird's eye view

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Speaker 1: of what's going on in Illinois and whether this demonstrates

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Speaker 1: something larger than just finance's Illinois absolutely like, I'm not

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Speaker 1: ever going to recover from this. No, Illinois could solve

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Speaker 1: all its problems tomorrow if they had the political will

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Speaker 1: to do it, which is exactly one of the one

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Speaker 1: of the rating agencies brought up last week. They say, Wow,

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Speaker 1: a state that goes three years without a budget, which

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Speaker 1: is what we're heading into, Uh, is demonstrating lack of

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Speaker 1: political will. But they could do it tomorrow. Or very

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Speaker 1: wealthy state they're you know, the capital of the Midwest, right,

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Speaker 1: everyone goes to Illinois. Everyone goes to Chicago. Just to

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Speaker 1: put this into perspective, Uh, Joe mysa. Illinois revenue so

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Speaker 1: a steep year over year drop last month, the commission said, Uh,

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Speaker 1: this is I mean, according to a monthly report issued

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Speaker 1: Tuesday by the PIE part partisan Commission on Government Forecasting

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Speaker 1: and Accountability, UH significant downward adjustment to its estimates coming

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Speaker 1: in March. Had overall base revenues that had to a shortfall,

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Speaker 1: gross personal income tax everything is down, down, down, down down.

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Speaker 1: So this is more than just simply coming up with

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Speaker 1: a budget. I mean, they face pension issues, they pay,

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Speaker 1: they face Uh, you know, revenue, tax revenue issues. It's

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Speaker 1: really that easy. A lot of the a lot of

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Speaker 1: that fall in revenue was because an income tax increased

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Speaker 1: lapsed and uh you know that. So there's that um

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Speaker 1: But of course there's also some people moving out of state. Yes,

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Speaker 1: you're right there. Uh you know, Illinois is is a

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Speaker 1: pin you brought up before, the sort of big picture.

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Speaker 1: Illinois is sort of an outlier. It's the exception that

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Speaker 1: proves the rule. Uh, the rule being, you know, municipalities

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Speaker 1: take care of themselves. They're well run, they don't default

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Speaker 1: on their debt. In Illinois, what you have is the

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Speaker 1: lawmakers sort of driving the bus off the cliff. Remember

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Speaker 1: the old headlines in the New York Times bus plunge kills.

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Speaker 1: This is what it's like. Bus plunge in Illinois. Happy Friday. Uh,

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Speaker 1: you know, I want to I want to ask though,

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Speaker 1: about the bonds of Illinois. There was a great chart

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Speaker 1: on the terminal this week by Martin Braun looking at

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Speaker 1: how foreign money is flooding into municipal bonds in the

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Speaker 1: United States, and I found this fascinating. I'm wondering, are

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Speaker 1: they going to places like Illinois. Oh, of course they are,

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Speaker 1: especially because uh, you know, by driving the bus off

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Speaker 1: the cliff. For the last you know, two and a

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Speaker 1: half three years, we've seen spreads over the benchmark municipal

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Speaker 1: Uh it's almost children fifties sometimes of three basis points

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Speaker 1: over what triple A municipalities borrow four. So you're getting

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Speaker 1: a big yield premium. But of course for foreign investors

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Speaker 1: who are getting sometimes zero percent, uh, US munies look terrific.

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Speaker 1: They just have to kind of there is a learning

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Speaker 1: curve to them. Just to put this into more into

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Speaker 1: sharper focus. Uh. This was in January, right, the Attorney

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Speaker 1: General of Illinois asked a judge to lift an order

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Speaker 1: that required state workers to be paid during the state's

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Speaker 1: record nineteen month as you said, the budget impass in

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Speaker 1: hopes and so on, and they filed a motion in

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Speaker 1: the Saint Clair County to dissolve the order that would

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Speaker 1: have authorized the state controller to actually pay out the wages,

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Speaker 1: so they don't have to pay out the wages. At

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Speaker 1: what point does this just not come workable? Uh? Probably

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Speaker 1: June one, Okay, that's when they really should have their

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Speaker 1: next budget all set and ready to go. And you

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Speaker 1: know what chances are they will because I really don't

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Speaker 1: know municipalities except the ones that are in extremists that

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Speaker 1: drive the bus off the cliff. So you think that

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Speaker 1: somebody who goes into into Illinois bonds that are yielding

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Speaker 1: three or four percentage points above where other where triple

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Speaker 1: A meetings are yielding, that they're going to get their

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Speaker 1: money back. That's money good. Sure, Illinois can't afford not

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Speaker 1: to pay its debts, so they're not going. They're not going.

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Speaker 1: You know, first of all, bankruptcy is in an option

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Speaker 1: for states. But yeah, they're you know, Illinois going to

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Speaker 1: be okay. Well, one area that might not be okay.

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Speaker 1: We need to talk about putter Eco because this week

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Speaker 1: there were some developments. The Fiscal Control Board rejected the

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Speaker 1: governor's plan for financial plan going forward. Can you give

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Speaker 1: us some color around this, what this means for bond

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Speaker 1: holders and what this means in general for the for

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Speaker 1: the island's financial health. Wow. We had a terrific piece

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Speaker 1: on Bloomberg View today by Antonio Weiss, the ex Treasury

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Speaker 1: official who helped out with the UH setting up the

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Speaker 1: oversight board, and he said he advocates bankruptcy because he

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Speaker 1: doesn't think the new governor is going far enough in

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Speaker 1: adjusting the debt, so he is really advocating haircuts for all.

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Speaker 1: You know, you still have some hedge funders out there

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Speaker 1: who bought Puerto Rico geos or bought Puerto Rico sales

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Speaker 1: tax geos are general obligation bonds. Go ahead, right Who

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Speaker 1: who believe that it's geos at par I? Remember that

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Speaker 1: was a rallying cry. Guess what, no g knows it

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Speaker 1: par for you? It looks like hair cuts for all.

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Speaker 1: And with this wife piece today, that was sort of

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Speaker 1: really putting it on the table, telling the governor, who,

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Speaker 1: by the way, is advocating cuts for everyone, but this

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Speaker 1: wife's pieces, No, no, you're not going far enough. You've

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Speaker 1: got to really reduced that no par for you. Will

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Speaker 1: keep that in mind as we head towards lunchtime. Joe Mesa,

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Speaker 1: thank you so much for joining us. As always, Joe Mesk,

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Speaker 1: editor for Bloomberg Grief on municipal markets and expert on

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Speaker 1: all things related to Muni's. Now we want to hear

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Speaker 1: from Ian wish Art. He is a Bloomberg News reporter

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Speaker 1: in Brussels, and he wrote a story today that I

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Speaker 1: found fascinating about Theresa May who is the head of

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Speaker 1: Britain and sort of the internal discussions that she's having

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Speaker 1: with parliament in that country about what she may have

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Speaker 1: to face as she engages in the Brexit process. Ian,

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Speaker 1: thank you so much for joining us. Can you give

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Speaker 1: us a little bit of color around some of the

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Speaker 1: pessimistic paintbrush that the parliament parliamentary members are trying to

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Speaker 1: give to Theresa May, to give her sort of a

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Speaker 1: dose of reality. That's right, Hello from Brussels, where the

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Speaker 1: summit has been going on between EU leaders and basically

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Speaker 1: you're right. There's a lot of people in a lot

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Speaker 1: of members of the Parliament of the UK who who

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Speaker 1: aren't happy with the way that the Prime Minister Theresa

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Speaker 1: May has gone about this. Some on one hand, want

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Speaker 1: her to trigger what they call Article fifty, which is

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Speaker 1: part of the e use Constitution which allows a country

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Speaker 1: to leave the EU. They wanted to do that as

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Speaker 1: soon as possible. Others want her to wait a lot

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Speaker 1: longer to make sure she knows exactly what she wants,

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Speaker 1: and she's trying to balance, really balance those two extremes

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Speaker 1: of opinion um to please everybody at the same time

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Speaker 1: in London. Before she comes back here to Brussels to

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Speaker 1: the European Union to officially start the negotiations with the

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Speaker 1: EU about Brexit. I'm wondering you if you could maybe

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Speaker 1: just add to this some context regarding Northern Ireland and

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Speaker 1: Scotland and what this kind of means not only for

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Speaker 1: what becomes of Britain after the exit, but also what

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Speaker 1: this means for the European Union itself. Yeah, there's a

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Speaker 1: lot of confusion and a lot of complexity. Let's start

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Speaker 1: with Scotland, where Scotland obviously part of the United Kingdom,

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Speaker 1: so Scotland has to live with any decision that the

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Speaker 1: rest of the UK that England makes Scotland. Actually, the

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Speaker 1: people of Scotland actually didn't support Brexit, but the the

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Speaker 1: UK as a whole did, So they're talking about holding

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Speaker 1: a referendum of their own again in Scotland to break

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Speaker 1: away from England, to break away from the UK because

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Speaker 1: they don't like what from a Prime minister to reason

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Speaker 1: May is doing in pulling out of the EU. So

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Speaker 1: that's one story that might develop over the next year

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Speaker 1: or so. Then you've got Northern Ireland, which again is

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Speaker 1: part of the UK, but the Republic of Ireland isn't

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Speaker 1: the Republic of Ireland in a separate country that belongs

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Speaker 1: to the EU and will stay in the EU. So

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Speaker 1: you've got a border between the Republic of Ireland and

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Speaker 1: Northern Ireland. UM, and that's been subject to of violence

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Speaker 1: and war over the sort of the last thirty forty years. UM.

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Speaker 1: There was peace in the last ten years. But they're

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Speaker 1: really worried that if that border becomes a border not

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Speaker 1: just between Ireland and Britain, but between the whole of

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Speaker 1: the European Union and Britain, then those troubles might come

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Speaker 1: back again. So that's obviously on the minds of negotiators,

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Speaker 1: both in London and in Dublin, and they want to

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Speaker 1: avoid that in whatever deal they come up with. And

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Speaker 1: you're right, there's also talk about the future of the

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Speaker 1: EU and what that will look like after the UK leaves.

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Speaker 1: And you said a while back that Parliament members were

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Speaker 1: not happy with the approach that Theresa May has taken

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Speaker 1: with respect to Brexit. What could she change that would

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Speaker 1: bring them into the fold and make them more supportive

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Speaker 1: of her plans? Um. It depends which ones you ask,

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Speaker 1: but most of them will say we want some reassurances

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Speaker 1: that you're going to protect our interests, that you're going

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Speaker 1: to protect British interest that we're not going to be

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Speaker 1: worse off after we leave the European unions, so um

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Speaker 1: nationals are protected in where they can travel, where they

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Speaker 1: can go and work in Europe. That the the UK

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Speaker 1: is not paying into the European Union budget anymore. There's

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Speaker 1: some speculation that it may have to pay sixty billion

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Speaker 1: euros when it leaves of financial contributions, and they don't

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Speaker 1: want that either because they say, why are we leaving

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Speaker 1: the EU We still have to pay So all these

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Speaker 1: reassurances need to be made. The trouble for the reason

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Speaker 1: may if she can't really make those reassurances, because it's

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Speaker 1: all depends on what sort of deal she gets with

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Speaker 1: the EU over the next eight months or so. I

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Speaker 1: want to thank you very much for joining us. Ian

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Speaker 1: wish ARTI is our European government reporter. He is reporting

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Speaker 1: from Brussels. Thanks for listening to the Bloomberg P and

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Speaker 1: L podcast. You can subscribe and listen to interviews at iTunes, SoundCloud,

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00:26:32,520 --> 00:26:36,720
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

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Speaker 1: out there on Twitter at pim Fox. I'm out there

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Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast.

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Speaker 1: You can always catch us worldwide on Bloomberg Radio