Latest / Bloomberg Intelligence / Teneo's Nickel on the Rise of Populism and Impact to EU (Audio)

Transcript

Teneo's Nickel on the Rise of Populism and Impact to EU (Audio) · Bloomberg Intelligence

• 0:02
  Speaker 1: Global business news twenty four hours a day at Bloomberg
• 0:05
  Speaker 1: dot Com, the Radio, plus mobile and on your radio.
• 0:09
  Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters,
• 0:13
  Speaker 1: Simon Charlie Poloty. Aftershocks of the UK's vote to leave
• 0:16
  Speaker 1: the European Union reverberating across financial markets again today after
• 0:22
  Speaker 1: a weekend of political turmoil, with the pound extending its
• 0:25
  Speaker 1: record sell off, European equities dropping to levels last seen
• 0:29
  Speaker 1: in February. Right now, we have got the pound of
• 0:32
  Speaker 1: the dollar thirty one seventy four, down three point seven percent,
• 0:36
  Speaker 1: Crew down three point six percent, dropping a dollar seventy
• 0:39
  Speaker 1: three forty ninety one, Gold up four tenths of one percent.
• 0:43
  Speaker 1: It is up five forty thirteen twenty seven front ounce
• 0:47
  Speaker 1: of gold. SMP five hundred index down forty one to
• 0:50
  Speaker 1: nineteen ninety five, a drop there of two percent. NAZ
• 0:54
  Speaker 1: Stack down one twenty points, the drop there of two
• 0:57
  Speaker 1: point six percent. CAW Jones Industrial labay it is lower
• 1:00
  Speaker 1: now by three hundred and eleven points for the down
• 1:04
  Speaker 1: Jones Industrial average, that is a drop of one percent.
• 1:08
  Speaker 1: We're brought to you by Hartford Funds Human Centric Excited
• 1:11
  Speaker 1: Investing insight number seven for financial advisors. Keeping in touch
• 1:15
  Speaker 1: with clients through technology is a great idea until it's
• 1:19
  Speaker 1: a bad idea. To find out why, go to human
• 1:21
  Speaker 1: Centric Investing dot com, Hartford Funds Distributors LLLC. I'm Charlie Pellow.
• 1:27
  Speaker 1: That's a Bloomberg business flash. You're listening to taking Stock
• 1:32
  Speaker 1: with Bim Fox and Kathleen Hayes on Bloomberg Radio. The
• 1:36
  Speaker 1: political mess in the UK just seems to get messier,
• 1:40
  Speaker 1: and SMP Global Ratings is not ignoring it. They just
• 1:44
  Speaker 1: cut the UK's top credit rate by two levels, of course,
• 1:47
  Speaker 1: as follows the breggsit vote, SMP lowering their rating to
• 1:50
  Speaker 1: double A from triple A. That's still pretty strong. Nevertheless,
• 1:54
  Speaker 1: they are concerned about a less effective policy framework in
• 1:58
  Speaker 1: the UK, the risk of a deterior in external financial
• 2:01
  Speaker 1: conditions and even our financing conditions, I should say not
• 2:05
  Speaker 1: exactly the same thing. Then there's constitutional issues arising to
• 2:08
  Speaker 1: the majority of voters in Scotland and Northern Ireland having
• 2:10
  Speaker 1: opted to remain in the EU. Those are the factors
• 2:13
  Speaker 1: cited by SMP today. We're joined now by Carston Nichol's
• 2:16
  Speaker 1: Deputy Director of Research at TO neo intelligence, He joins
• 2:20
  Speaker 1: us from Brussels, Carson, I think the question now is
• 2:24
  Speaker 1: where is the leadership. You wrote a piece, uh, just
• 2:28
  Speaker 1: in the last couple of days talking about the dismal
• 2:31
  Speaker 1: performances and apply to the UK referendum outcome put on
• 2:36
  Speaker 1: by some of the EU's top leaders. Yeah, that's uh,
• 2:40
  Speaker 1: that's certainly the way we look at it. I mean,
• 2:43
  Speaker 1: if you considered the immediate reaction see in Brussels, um,
• 2:47
  Speaker 1: from the presidents of the European Council, the European Parliament,
• 2:50
  Speaker 1: the European Commission, UM, there wasn't much indication at all
• 2:54
  Speaker 1: and about where we're headed next. Um. At the same time,
• 2:57
  Speaker 1: if you look at Westmint, say, if you look at
• 2:58
  Speaker 1: British politics, there's certainly you know, there's a leadership stand
• 3:02
  Speaker 1: off going on within the Conservative Party. There's certainly one
• 3:05
  Speaker 1: going on within the opposition, within the Labor Party. UM.
• 3:08
  Speaker 1: So you know, all of this leaves us with the void.
• 3:10
  Speaker 1: Basically the leadership question is utterly unresolved. And that's uh.
• 3:15
  Speaker 1: As so often in the recent past in Europe, it
• 3:17
  Speaker 1: seems that it's down to Angela Nack or the German
• 3:19
  Speaker 1: Johnsay in Berlin, who was meeting with her French and
• 3:22
  Speaker 1: Italian counterparts this evening to give some indication of what
• 3:26
  Speaker 1: we're heading next. Angela Merkell, of everyone who has spoken out,
• 3:30
  Speaker 1: seems to be the one who, whether you're reading between
• 3:33
  Speaker 1: the lines or not, just as hoping for some way
• 3:36
  Speaker 1: to preserve a strong, certainly strong trade relationship with the
• 3:41
  Speaker 1: UK and the EU, particularly in time when you know
• 3:44
  Speaker 1: Italy's economy and markets and banks don't look so good,
• 3:47
  Speaker 1: France has problems, EU UK leaves the EU and what
• 3:52
  Speaker 1: does she have left. Yes, that's that's certainly true, and
• 3:55
  Speaker 1: I think so from her perspective. There's obviously always been
• 3:59
  Speaker 1: a strong interests, not just for economic reasons to keep
• 4:02
  Speaker 1: the UK inside the u UM, there's also the whole
• 4:05
  Speaker 1: political story of you know, strengthening this let's say North
• 4:08
  Speaker 1: European liberal minded, pro market planned with an EU policymaking.
• 4:14
  Speaker 1: But on the other hand, now that this decision has
• 4:16
  Speaker 1: been made, I think German policymakers and makers specifically have
• 4:20
  Speaker 1: have have to look ahead and they need to balance
• 4:24
  Speaker 1: different opinions within the remaining U twenty seven. And if
• 4:28
  Speaker 1: you look further to the south and specifically to Paris,
• 4:31
  Speaker 1: and you'll see that other number states are already pushing
• 4:34
  Speaker 1: for a pretty heartline stands with the vise of the
• 4:37
  Speaker 1: United Kingdom. And I think the reason for this is
• 4:39
  Speaker 1: quite clear. Many leaders in Europe face their own eurosceptic
• 4:42
  Speaker 1: movements at home and they want to make sure that
• 4:44
  Speaker 1: they send a strong message to their own electorate that's
• 4:47
  Speaker 1: flirting with eurosceptic forces is not a good idea in
• 4:49
  Speaker 1: the first place. So it's going to be very difficult
• 4:52
  Speaker 1: to balance these positions within the remaining EU twenty seven.
• 4:56
  Speaker 1: So we have Spanish bond yields drop in the most
• 5:01
  Speaker 1: since twenty fourteen, after the acting Prime Minister Mariano Rojoy
• 5:05
  Speaker 1: defied opinion polls to consolidate his position in the country's
• 5:10
  Speaker 1: general election, and some have speculated that the Brexit vote
• 5:14
  Speaker 1: suggested that the opposition would win. What does this mean
• 5:17
  Speaker 1: for the future of the EU? Well, I think how
• 5:21
  Speaker 1: strong the the impact of Brexit really has been for
• 5:24
  Speaker 1: this um, for this Spanish election result, I think that's
• 5:27
  Speaker 1: that's that's an open question. Um. Certainly, what we're seeing
• 5:32
  Speaker 1: is that government formation has been difficult in many places
• 5:36
  Speaker 1: in Southern Europe of the last couple of years, and
• 5:39
  Speaker 1: I think The underlying trend that we see in many
• 5:41
  Speaker 1: of these places across the board, in Northern Europe and
• 5:44
  Speaker 1: Southern Europe is the rise of political fragmentation, the rise
• 5:47
  Speaker 1: of populist forces. Even in places where you don't see
• 5:50
  Speaker 1: this in parliament, such as in the UK, you see
• 5:53
  Speaker 1: that populism and political fragmentation speak three into mainstream parties.
• 5:58
  Speaker 1: And I think the bottom line the outcome for for
• 6:01
  Speaker 1: policy making endure is that it is getting more and
• 6:03
  Speaker 1: more difficult to find centrist majorities for pragmatic policy choices
• 6:07
  Speaker 1: here in Brussels. So the political center is becoming more
• 6:10
  Speaker 1: and more constrained and that makes it more and more
• 6:13
  Speaker 1: difficult to push for policies from you know, closer integration,
• 6:17
  Speaker 1: to economic reform to more trade. So that's certainly warrying
• 6:21
  Speaker 1: development for policy making in Europe. Well, what is the
• 6:24
  Speaker 1: chatter in Brussels? Are people looking over the shoulders people
• 6:27
  Speaker 1: whose livelihoods have jobs with you know, the EU and
• 6:30
  Speaker 1: it because a lot of people are wondering, is this
• 6:32
  Speaker 1: the beginning of the end for the EU? No? I
• 6:35
  Speaker 1: don't think so. I think what it is or it
• 6:38
  Speaker 1: feeds into a longer standing development towards more inter governmental solution.
• 6:43
  Speaker 1: I think that has always been the question here in
• 6:44
  Speaker 1: Bluff of how do you want to design this European
• 6:46
  Speaker 1: project in a way where Member States government play a
• 6:50
  Speaker 1: crucial role. That's one option, or by really integrating sovereignty
• 6:55
  Speaker 1: in Brussels and strengthening European Commission. And I think the
• 6:58
  Speaker 1: trend that we've already during the Eurogote crisis over the
• 7:01
  Speaker 1: last couple of years is that Member states government continued
• 7:04
  Speaker 1: to play a very strong role in the European progress.
• 7:07
  Speaker 1: So I think the outcome here in Brucos is that
• 7:10
  Speaker 1: what we're going to see over the next couple of
• 7:12
  Speaker 1: years more and more at hoc Field incremental pro progress.
• 7:16
  Speaker 1: If there is a crisis that needs to be resolved,
• 7:18
  Speaker 1: we see member states coming together. It's going to be
• 7:21
  Speaker 1: more of a step stop approach to Europe. Well, that's
• 7:24
  Speaker 1: certainly the optimistic view for the European Union itself. Remains
• 7:28
  Speaker 1: to be seeing what it means for the UK as
• 7:30
  Speaker 1: they prepared to leave the European Union. Carson Nichol, thank
• 7:33
  Speaker 1: you so very much. He's deputy director of research at
• 7:36
  Speaker 1: to Nail Intelligence. Joining us from Brussels and Kathleen Hayes.
• 7:41
  Speaker 1: This is taking Stock on Bloomberg Radio. Brexit reverberating through
• 7:48
  Speaker 1: businesses and companies around the world. What does it mean
• 7:51
  Speaker 1: for luxury travel? We're going to find out next as
• 7:56
  Speaker 1: taking Stock continues on Bloomberg Radio.