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Bloomberg business flash. The Brexit vote on Bloomberg Radio. The Brexit debaate and even more heated it in the British Parliament, as a Conservative lawmaker asked the head of the Bank of England Mark Arney of his former employer, Goldman Sachs, encouraged him to warn about the risk of the UK leaving the European Union. Can I'll just give you the opportunity to refute any suggestion that Goldman Sacks may have put pressure on your second Wow. Um, it's not an
allegations refuge. Well, yes, I refute it categorically and and stunned. Stunned, says smart Kearney. Let's ask David Danny blanche Flower, professor of economics at Dartmouth College, if he was stunned by this question. Danny, a brit himself and a former member of the Bank of England's Monetary Policy Committee. Welcome back, Danny, be great to chat you. I was completely stunned too. I don't think in all the time I've listened to governors of the Bank of England answering questions in front
of the Treasury Select Committee. I've ever heard a governor say wow. I mean he didn't have to say much. Yes, that was quite something. That and another another person asked him about whether he'd been leaned on by the government to say that the things that he'd said, and that that actually he'd been pushing government propaganda, and the governor was not very happy, shall we say, and I think it was out of line? Why was it out of line? What's wrong with at least asking the head of the
Bank of England these questions? Well, I think, I mean it's I guess it's you know, the way the way it was said probably was a little bit too much, but you're right, I mean the job of the governors to explain what he's doing. I mean he actually said, this is actually part of my remit this is what I'm supposed to do. It was asserted that this vote for Brexit is like an election, but the governor I think made it very clear that that's not true, partly
because we know what would happen to the Brexit. You would leave and then there'll be a lot of uncertainty. An election is not so clear, so that was the big issue. But I think the evidence is that from lots of sources that Brexit looks like an econog economically negative event for the UK and probably for the world. Why for our listeners, who maybe are not following it
as closely, why will Brexit be so negative? Well, I think the first thing is we've already seen some slowing in the UK economy, We've seen a rise in uncertainty about what the future might bring. But I think you and I have talked on this before. I mean, it's quite clear that this would be in a sense the first domino that might generate other other countries to fall next it, if you like, um, the Netherlands leaves or the Grease leaves or whatever. So the breakup of this
huge economic area would be a very big deal. But I think the evidence certainly looks that it would generate, certainly in the short term, some considerable slowing of the UK economy which could feed through to the rest of the world. I mean, the FED is going to be mindful it makes a vote on very little time prior to that Brexit vote, so that that in itself is going to have an implication. I mean, obviously, if it looks like it's not going to pass, that's one thing.
But if it looked like it did, if you were sitting at the FED, you'd be mindful of this to be a worldwide event. Then I just want to push back a little bit of this on the on the domino theory. I mean, domino theories have been used in the past, and they've been shown in the past and not be accurate. So rather than speculate on it, is there any way to sort of just quantify what No' Well, I don't think there's a way to quantify what the Bank having has done, which I don't think is crazy,
is they have seen slowing already. Um, they've attributed half of that slowing to the fears of Brexit. We've actually seen contracts, apparently commercial property contracts that have had clauses put in them which says that in the event of Brexit, the deal won't go ahead. And that's that's obviously the first thing. But I do think that that that it has political implications, probably more than economics to other parts
of Europe, and there are movements in other countries. In France and as I said in the Netherlands, that suggests that um, if a country can leave and nobody thought they could, then others could too. Remind us Danny of what the pro brexit argument is Internet sell Well, the argument, more than anything is that the UK needs its own sovereignty, it doesn't need rules set out to for it by
the European community. And even though they haven't set out what brex it would look like, I mean, some of them will argued it would look like the Albanian model, that that would absolutely be wonderful and they could re negotiate all kinds of deals separately and they would have
control over immigration. But but sadly they haven't really persuaded people as far as I can see in international groups around the world, including the o E, c D and the I m F. And President Obama has said, this really does not look credible, and you're not going to be very able quickly to negotiate trade deals and all the countries you're going to need to do that with. So that's so the theory is obviously that's a negative event.
Is there any a fear that there will be a backlash from the electorate, from all the people explaining why a vote to leave is terrible. Well, I certainly think that's a likelihood of that, not least in fact in the government. I mean, David Cameron looks to be in trouble whichever way it goes. If there's a vote for Brexit, then obviously I think it's very likely have to have to quit. And if there's a vote not to leave, and it's pretty narrow now he's got a split party. Um, politically,
this is a highly charged event. So yes, I think it's going to have implications later, but probably not least amongst the governing Conservative Party, where you actually have got some government ministers on each side. So I think that's where the biggest term was going to be. Thank you very much. Danny blanche Flower, Professor of Economics, Dartmouth College, on Twitter at d underscore a blanche Flower about the Brexit vote on June. This is Bloomberg Radio. Location, Location,
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