The Brexit vote on Bloomberg Radio, continuing coverage of the vote in the United Kingdom. Polling has ended and the count continues in the United Kingdom over the referendum to remain or to leave the European Union. Here to help us understand more is arenab Doss. He is head of Emerging Markets macro for invest Goo Fixed Income and he joins us from London area. Thanks very much for being with us. Tell us a little bit about your day
and what did you see during the voting process. UM. Well, you know, it's like all the news stories are saying there's there's been a raining, cats and dogs and problems with the with the transport system, so there was concern about turnout. UM. The Nigel Farage quote UM to Sky News makes the very important point. I think that turnout
was extremely high. There's some estimates that turnout was perhaps UM despite the despite the problems with the weather and the transport system, which indicates that UM, probably the Remain camp was successful in getting the vote out. UM. And by all accounts a high turnout would be would point to a Remain success. So I think that's that's where it's going. It's quite early to be sure yet, but
that's the direction that we're headed. I think, so if we're heading that direction, let's let's just look as sort of emerging markets broadly, because it seems that you can slice a possible Brexit vote which apparently is not passing a lot of different ways from a lot of different countries. But the one big factor has been uncertainty, right right, I think the uncertainty would have been very well and if it is the case that there is still a
vote for Brexit, the uncertainty will be very magnified. The market has effectively priced out the risk of Brexit UM in UK assets, European assets, and generally in risky assets. UM. There's probably some more upside because there is residual uncertainty. But I think if you know the danger now is that if UM, if the vote count goes the other way, that there's significant downside, right because it's all been pricing
towards the Brexit out sorry towards the Bromain outcome. UM. I think if if that's the outcome that we get Bermaine UM, then we're more likely to see continued UM calming down in the markets. Right because a major event risk and a major source of political contagion in Europe, copycat eggs at referendums and so on, as well as the political crisis within the UK that Professor Blanchflower mentioned.
All these things would be much less of an event risk and so I think we would have continued buying of of risky assets UM, including emerging markets, because liquidity conditions in the world remain very high, inflation is very low, yields are very low everywhere. UM. So I think you know that it would be a kind of a bit of a green light. It wouldn't really solve anything fundamental,
but it wouldn't open a kind of worms either. But I'm wondering if you could tell us about what the European Union would do or respond no matter which way the vote goes. It's likely to be very close. The fact that you have so many people in a major European Union country who would like to leave this particular club.
What will the European Union's response be. Well, I think in the in the remains scenario, UM, I think we're likely to get a kind of um validation of the deal that Prime Minister Cameron UM achieved with the with the European Union back in February, which essentially paves the way towards a kind of full fledged two track Europe where the Eurozone heads for deeper integration, however slowly towards
some sort of federalization, hopefully along the American model. But that's by no means assured UM and the rest of the European Union UM is in a different track to
a different destination. Right that the UK then has an opt out from this idea of ever deeper union, which is one of the fundamental tenets of the European Union and of course of the euro itself, so that I think it's in and of itself, will be an important change, almost regardless of the um of the outcome for Prime Minister Cameron himself, and that will create room for Europe as a whole to hold together UM with countries that are Euroskeptic but not members of the euro UM and
stay in the in the European unions, such as Denmark. Does this put UM? I just wonder what is it does? What does it say for Germany? You know, Nigel Farrage, who's one of the big leaders, the biggest voices in favor of Brexit, critical, very critical of Germany and how they become so UM dittorial right or the EU. If I can sum up the tone of what he has said, does Germany rethink its position? Does Germany say, well, I'm glad, breathe a sigh of relief that this didn't pass, but
take somewhat different tact in its relations with some EU countries. UM, well, I think you know. The first thing for Germany is that having the UK UM stay in the European Union strengthens Germany's hand for a more economically liberal and open
European Union and Eurozone right. So Germany is always UM in a position of UM, supported I would say, or even lead in some respects by the United Kingdom UM in opposing the UH greater degree of labor market rigidities, difficulties and hiring and firing difficulties in UM, in the budgets, difficulties in the welfare state UM, and the protection for labor that is more present, let's say, in southern Europe
and in the Mediterranean countries and also in France. So I think, for for you know, for starters UM, Germany's view and preference for a more open European system economic system would be supported UM. On the issue of UM, the the idea of what ultimately needs to take place, a kind of federalization UM in which there's political union ultimately fiscal union UM and a much stronger banking union UM. I think the the continuance of the UK in the EU makes that a little bit less easy to accomplish.
If there were shocks, it would be perhaps faster, but in this scenario probably be slower and may not get there until the next shock. Aarn Abdas, thank you so much for joining us head of Emerging Markets MACO for invest Go fixed Income, taking a look at the Brexit vote, taking stock Bloomberg Radio