WEBVTT - Danny Blanchflower: Cameron's Problems Are Far From Over(Audio) 0:00:00.720 --> 0:00:07.320 The Brexit vote on Bloomberg Radio. Polls close at ten 0:00:07.480 --> 0:00:11.320 pm in Britain. That is now and the future Britain's 0:00:11.360 --> 0:00:14.440 relationship with the European Union though, will not be known 0:00:14.560 --> 0:00:17.480 until at least nine hours from now. That's at seven 0:00:17.520 --> 0:00:21.520 am tomorrow morning on Friday, and of course there are 0:00:21.560 --> 0:00:24.480 no exit polls and the results so will come in 0:00:24.600 --> 0:00:28.200 during a three period three hour period on Friday between 0:00:28.240 --> 0:00:31.360 four am and seven am, so by breakfast time the 0:00:31.440 --> 0:00:35.680 results of the European Union referendum should be known. Here 0:00:35.720 --> 0:00:39.400 to tell us more is a leading economist, Danny blanche Flower, 0:00:39.520 --> 0:00:43.839 Professor of Economics at Dartmouth College. He is also a 0:00:43.840 --> 0:00:47.800 former member of the Monetary Policy Committee of the Bank 0:00:47.960 --> 0:00:51.280 of England. He can be followed on Twitter at d 0:00:51.720 --> 0:00:55.400 underscore blanch Flower. Danny blanch Flower. Thank you for being 0:00:55.400 --> 0:00:59.840 with him. Well interesting day, goodness me go ahead give 0:01:00.000 --> 0:01:04.520 to your thoughts. Well. My thoughts are that the markets 0:01:04.560 --> 0:01:09.760 are clearly expecting a Remain vote. They saw polls over 0:01:09.800 --> 0:01:13.160 the last few days. Ten of the last fifteen have 0:01:13.280 --> 0:01:18.679 been for Remain. But we've seen big surprises in UK polling. 0:01:18.720 --> 0:01:22.319 They're hoping that it looks like the Scottish referendum, which 0:01:22.400 --> 0:01:25.679 in the end people turned out for the status quo. 0:01:26.400 --> 0:01:29.480 But the memory is a year ago. Um. They the 0:01:29.520 --> 0:01:32.880 predictions in the polls for the election outcome were very 0:01:32.959 --> 0:01:38.080 bad and obviously the markets and everybody else in economic 0:01:38.200 --> 0:01:42.600 terms anyway, is assuming that remain will come. The worry 0:01:42.920 --> 0:01:46.080 is actually that if Brexit actually is in the majority, 0:01:46.640 --> 0:01:49.760 this would be a surprise to the markets and that 0:01:49.800 --> 0:01:54.640 would likely generate major market turmoil. It would seem to me, 0:01:54.920 --> 0:01:59.360 not least the pound. And that's the reason why contingency 0:01:59.440 --> 0:02:02.680 planning in Britain, banks and around the world that is 0:02:02.720 --> 0:02:05.720 about to swing into gear as we wait for for 0:02:05.840 --> 0:02:08.880 the results. This is this is our a mentor's day. 0:02:08.960 --> 0:02:11.560 I would say, why was this vote so close? Danny 0:02:11.600 --> 0:02:15.760 blanche Fower? You know, year six months ago, maybe Ben 0:02:15.800 --> 0:02:17.799 three or four months ago. Oh Brexit, Yeah, I guess 0:02:17.840 --> 0:02:21.240 we're gonna start talking about it and then suddenly Brexit. 0:02:21.440 --> 0:02:27.920 What happened? Well? Um, interesting? I think it's an interesting question. 0:02:28.120 --> 0:02:32.360 I think actually it's a continuation of the hurt that 0:02:32.440 --> 0:02:36.160 people have seen from the Great Recession. People are not 0:02:36.320 --> 0:02:39.520 happy with the status quo. I guess a number that 0:02:39.560 --> 0:02:42.079 I often kind of look at is If you look 0:02:42.120 --> 0:02:46.679 at the GDP per capita in the UK today compared 0:02:46.680 --> 0:02:49.639 with the start of the recession in two thousand and eight, 0:02:49.680 --> 0:02:55.919 it's up one in total. Real wages are really still 0:02:55.960 --> 0:02:58.440 below what they were in two thousand and eight, and 0:02:58.480 --> 0:03:02.280 there has been a major in looks of people from 0:03:02.360 --> 0:03:06.160 the rest of your Immigration has risen rapidly. Many of 0:03:06.200 --> 0:03:09.000 the issues in the US have repeated in the UK. 0:03:09.560 --> 0:03:12.280 They've seen the flood of immigrants coming and they've also 0:03:12.400 --> 0:03:17.040 seen the poor performance of the European economy. France has 0:03:17.040 --> 0:03:19.840 a temper cent unemployment rate, We've still got twenty odd 0:03:20.120 --> 0:03:22.560 in Spain, in Greece, and people think, you know, we 0:03:22.600 --> 0:03:25.600 want our own sovereignty. We don't want to be stuck 0:03:25.600 --> 0:03:28.480 with these Europeans. Is a losing game, and so we've 0:03:28.560 --> 0:03:33.440 ended up seeing something very close. Um, I'm not sure 0:03:33.480 --> 0:03:35.920 that I that I would have predicted was quite as 0:03:35.920 --> 0:03:39.320 close as this. Quite so difficult to to cool given 0:03:39.400 --> 0:03:42.320 that term, if you like, the status quo has thrown 0:03:42.400 --> 0:03:46.360 everything it has at it. Danny Blancheflower, why did the 0:03:46.400 --> 0:03:51.960 Prime Minister David Cameron promised to hold this referendum? I 0:03:52.000 --> 0:03:55.000 think it's a really great question for him. I think 0:03:55.040 --> 0:03:58.600 he's gonna obviously regret it to this very moment. And 0:03:58.640 --> 0:04:02.040 obviously if Brex had come, he's gone tomorrow, and if 0:04:02.040 --> 0:04:04.520 it's very narrow he may actually be gone as well. 0:04:04.720 --> 0:04:08.320 I think the reality was that there was continuous infighting 0:04:08.400 --> 0:04:12.720 within the Tory Party. It's interesting he managed to get 0:04:12.800 --> 0:04:15.280 himself The good news was he got himself a twelve 0:04:15.320 --> 0:04:18.920 seat majority last May. But that turns out that he 0:04:19.000 --> 0:04:23.560 was vulnerable to views from the euroskeptics within his own party. 0:04:23.720 --> 0:04:26.200 And so what's interesting, I think is that the the 0:04:26.279 --> 0:04:31.200 in fighting, particularly for this vote is actually greater than 0:04:31.240 --> 0:04:34.880 it was at the election, more particularly between people within 0:04:34.920 --> 0:04:37.520 the same party. So I think the answer was it 0:04:37.600 --> 0:04:40.960 was called for internal political reasons. It was certainly not 0:04:41.440 --> 0:04:44.520 something that placed like Northern Ireland and Scotland and Wales 0:04:44.600 --> 0:04:47.520 were really looking for it to if you like, it's 0:04:47.520 --> 0:04:50.800 a sort of internal English issue within the within the 0:04:50.839 --> 0:04:55.320 Tory party. But presumably David Cameron didn't think relate your 0:04:55.400 --> 0:04:57.359 last question. He didn't think it was going to go 0:04:57.440 --> 0:04:59.680 down to the wire and he'd be sitting in Downing 0:04:59.720 --> 0:05:03.520 Street watching these results biting his fingernails. Well, the latest 0:05:03.760 --> 0:05:07.120 UGO of UK pull on Brexit, the UK leaving the 0:05:07.120 --> 0:05:13.479 European Union shows a vote of to remain to leave. 0:05:14.080 --> 0:05:18.839 This is being reported by Sky News, So again a 0:05:19.000 --> 0:05:21.479 narrow victory. So we could go back and forth, what 0:05:21.520 --> 0:05:23.560 if what if they leave? What if they stay? But 0:05:23.680 --> 0:05:26.880 regardless of whether they stay or leave, what does this 0:05:27.040 --> 0:05:32.080 mean for the UK going forward? What does it mean 0:05:32.279 --> 0:05:35.880 for the current government? Do they have to make changes? 0:05:35.960 --> 0:05:38.240 They can't. I guess you can't really adjust this one. 0:05:38.279 --> 0:05:40.520 It's not like all we can boost economic growth, right, 0:05:40.640 --> 0:05:44.880 or trying to raise prices like a central bank. Well, 0:05:45.080 --> 0:05:48.040 let's let's just sort of separate the economics at the moment, 0:05:48.040 --> 0:05:50.640 because obviously if there's a Brexit vote, we're going to 0:05:50.760 --> 0:05:52.400 have to talk about what the bank aving and would 0:05:52.440 --> 0:05:55.920 have to do, and global repercussions and so on. Let's 0:05:55.920 --> 0:05:58.040 think of the politics. I mean, I certainly think it's 0:05:58.040 --> 0:06:00.359 back to Pim's question. I certainly think if there's a 0:06:00.400 --> 0:06:03.599 Brexit vote, David Cameron called this vote there, I'm going 0:06:03.640 --> 0:06:06.159 to try and renegotiate Cam back and say we should remain. 0:06:06.920 --> 0:06:10.719 If if the vote is not to remain, that then 0:06:10.760 --> 0:06:14.520 that's a then politically he's gone, and presumably the Chancellor 0:06:14.680 --> 0:06:18.120 is gone. So that's a political crisis, I would say, 0:06:18.920 --> 0:06:22.320 particularly from a Brexit point of view. But I think 0:06:22.360 --> 0:06:26.520 there's still a major political issue, which is that supposing 0:06:26.600 --> 0:06:30.200 the vote is pretty close, which we sort of think 0:06:30.200 --> 0:06:32.520 it's probably going to be. I don't think it's going 0:06:32.560 --> 0:06:34.800 to be sixty forty when he could be, but I 0:06:34.839 --> 0:06:37.839 suspect no polls have shown that if it's a pretty 0:06:37.920 --> 0:06:41.080 done close vote, then Cameron is going to find it 0:06:41.160 --> 0:06:44.560 extremely hard with a twelve vote majority to pass anything 0:06:44.640 --> 0:06:47.200 or perhaps even to be able to remain as leaders. 0:06:47.200 --> 0:06:50.840 So a political crisis is probably the thing that's on 0:06:50.839 --> 0:06:55.680 the table the most assume. But obviously there's the economics 0:06:55.720 --> 0:06:59.440 we can talk about. Just to reiterate that, the you 0:06:59.680 --> 0:07:04.200 gov the Appolling Service reports that the UK pole on 0:07:04.320 --> 0:07:09.679 the European Union shows fifty remain and forty eight percent leave. 0:07:10.160 --> 0:07:12.560 Danny blanch Fower one thing that I found particularly interesting 0:07:12.640 --> 0:07:16.160 was who is able and eligible to vote? If you're 0:07:16.200 --> 0:07:19.360 a British, Irish or Commonwealth citizen and you're over the 0:07:19.360 --> 0:07:23.080 age of eighteen and registered in the United Kingdom, you 0:07:23.560 --> 0:07:28.560 can vote. Well, that's true, but actually I fit that criteria, 0:07:28.640 --> 0:07:31.680 but in fact I wasn't able to vote because I 0:07:31.680 --> 0:07:33.360 think you had to have been lived in the UK 0:07:33.440 --> 0:07:35.920 as well for the last for the last ten years 0:07:36.000 --> 0:07:39.680 fifteen actually last fifteen years. But I actually didn't get 0:07:39.720 --> 0:07:41.920 to vote. So I tried and I looked and they said, sorry, 0:07:41.920 --> 0:07:45.320 Blanche Flower, that you don't get to vote. Um, yes, 0:07:45.400 --> 0:07:48.480 so so people people who lived there. I think there 0:07:48.480 --> 0:07:51.360 were issues particularly about the say people who live abroad. 0:07:51.360 --> 0:07:53.000 I mean there's a big issue here, which is that 0:07:53.040 --> 0:07:55.920 there are three million people from Europe living in Britain 0:07:55.920 --> 0:07:58.000 who who probably don't get the vote, and there's two 0:07:58.000 --> 0:08:00.680 million people who are Britas who live in Europe. And 0:08:00.680 --> 0:08:02.680 it was I don't recall, I don't think they get 0:08:02.720 --> 0:08:06.280 the voto. Others may may tell me differently, unless you're 0:08:06.320 --> 0:08:10.280 from Ireland, Malta or a Cyprus. And I also found 0:08:10.320 --> 0:08:14.360 interesting that the Commonwealth citizens in Gibraltar are able to 0:08:14.440 --> 0:08:16.800 vote as are members of the House of Lords, and 0:08:16.840 --> 0:08:20.760 they are not necessarily allowed to vote in the general election. Right. 0:08:20.840 --> 0:08:23.840 And David Cameron apparently was headed to Gibraltar to give 0:08:23.840 --> 0:08:26.400 a speech the other day when there was the terrible 0:08:26.400 --> 0:08:29.200 assassination of a British empty and he and he didn't 0:08:29.240 --> 0:08:31.360 actually go there, and we should talk about that that 0:08:31.440 --> 0:08:34.880 in a sense that that that terrible political it was 0:08:34.960 --> 0:08:39.080 highly political event. It certainly appears that the polls were 0:08:39.120 --> 0:08:42.240 moving towards Leave and then there was that event and 0:08:42.360 --> 0:08:46.120 both parties pulled out, stopped campaigning any any further. And 0:08:46.200 --> 0:08:49.160 since that moment, it does look that the remain has 0:08:49.240 --> 0:08:51.120 moved to the ascent. And I'm not saying that that's 0:08:51.520 --> 0:08:54.080 you know, that that's been the driving force, but it 0:08:54.080 --> 0:08:56.680 it does seem that that was a turning moment when 0:08:56.800 --> 0:08:59.800 when the British people were totally shocked. I wonder Danny 0:09:00.000 --> 0:09:03.280 event as as a vote as a doesk settles on 0:09:03.320 --> 0:09:06.120 this vote, Let's say that the remains when I wonder, 0:09:07.040 --> 0:09:10.679 you know, where the focus turns next to people look 0:09:10.880 --> 0:09:13.440 at the economy again? Do they look at what are 0:09:13.440 --> 0:09:15.440 the what are the grapes of the British people they're 0:09:15.720 --> 0:09:19.160 faced with? That's a great question, Kathleen. I mean, my 0:09:19.160 --> 0:09:21.840 my view, as you know, over time has been the 0:09:21.920 --> 0:09:25.920 growth of the UK economy has been a major issue. 0:09:26.800 --> 0:09:30.720 We've seen very palled growth and it certainly appears that 0:09:30.800 --> 0:09:35.760 actually there's been some slowing um. The Monetary Policy Committee 0:09:35.840 --> 0:09:39.160 is has argued that that about half the slowing perhaps 0:09:39.760 --> 0:09:42.920 is because of the fear of Brexit, and so that's 0:09:43.080 --> 0:09:45.480 just if that's right and there isn't a Brexit, that 0:09:45.600 --> 0:09:49.800 actually there may be some turning back and some improvement, 0:09:49.880 --> 0:09:53.120 but all right, public Danny Blanchfare, thanks so much. This 0:09:53.240 --> 0:09:54.200 is Bloomberg Radio.