Good morning. You are watching the pulse. I am guy johnson. Bloombergs European Headquarters, the scene today. Boris johnsons major speech. We will be taking it live. He will say the u. K. Should leave the eu if David Cameron fails to achieve significant reforms. Then he is coming upstairs and we will have the opportunity to interview him. What do we know . We have been putting it all together. The best option, according to jared lyons, he used to be a london,n the city of the best option for britain is tuesday in a reformed eu. Many people are saying this is Boris Johnsons grandstanding before he runs for election. I am probably the chap that can get you a reformation more so that my buddy David Cameron. Lyons ran this report. What would it mean for the United Kingdom . Millions of jobs created inside london. Is this a london report or a u. K. Report . Released ahnson has number of strategic reports. This report goes on a broader context. If you get reform, youll get millions of jobs. If you have stay in the eu and not much changes, youll get 200,000 jobs. Outside of london, with the status quo, a distraction of over a million jobs a distraction of over a million jobs. Challenge then to eu . David cameron has got to win the election next year out right to deliver a referendum in 2017. A small point that people have not seemed to focus on. Reforms,do not get the it is not too bad as long as we negotiate a decent relationship. It is a close second that we would be outside the eu. Within that dynamic, what youve got is a new president of the eu. I caught up with stephen booth. A great conversation. They said it depends on what the other states what a great. If we did not get the reforms we wanted and decide to go for a brexit, what shape would that be . How involved with the u. K. Be on a trade basis . They say it is too early to say. It comes down to the economics of what you believe is good for the u. K. No man will say everybody can say reform is wanted. Demonstratedeu has with finesse beyond belief that this is not an institution which reforms easily. Junckerpr disaster, in the seat as president. Manus cranny. Do not miss Boris Johnsons speech later this hour and our indepth interview. Lets look at another Political Risk facing the u. K. Gotland will vote on scotland will vote on leaving the u. K. They debated and glasgow. They clashed over whether independent scotland would get to keep the pound. Its like getting a divorce and keeping the same joint rank account. You have to get agreement. What is plan b . Asit is our pound as well englands pound. It is logical and desirable to have a Currency Union. Atland is scotlands biggest export market and scotland is england secondbiggest export market. We will keep the pound because it is logical and desirable. The transaction costs are imposed because of the costs of independence. Poundyou again, the belongs to the u. K. Alan crawford. In a lot of swing voters, a lot of people undecided. To what extent did last nights debate move the dial for them . That is the Million Dollar question. Last night, the Biggest Surprise unassumingrling, the former chancellor of the exchequer really stepped up his game. He has been criticized for not stem theugh to nationalist surge. Last night, he seemed to do that. He was combating salmond, who u. K. Politician of the year. Combating up and was on the detail of what an independent scotland could actually expect in terms of eu membership. The currency was a big issue. Picking apart all of the detailed. Chancellorthe former , he appeared to land some blows. It economy did team seemed to take center stage. How pivotal is the pound and all of this . In all of this . Talk salmond salmond has by holdingotal himself hostage to the u. K. Government. It repeats that it will not allow an independent scotland to share the pound. Darling repeatedly pressed salmond, what is your plan b . Was a Campaign Tactic designed to scare the scottish people away from voting for independence will stop voting for independence. The headline in the daily record today in scotland was alex takes a pounding. Papers with aof similar line. Thank you very much. Later. Be back with him lets move on and talk about the standoff between russia and the west. Monitoring moscows response to sanctions very carefully. The bank in russia is a strong bank. A very high level of capital. Y well covered in terms of with a very good position in terms of liquidity. We are not concerned about an immediate negative effect on the credit, but we are looking at the situation very carefully. I hope the solution will be found in the interest of europe. He does not sound that worried. He made those comments before Vladimir Putin said he was ready to retaliate. Troopss grow about buildup in ukraines eastern border. Good to see you wearing a tie today, guy johnson. And you are not. You have a special guest. Boris johnson. He better show up in one, that is all i am saying. Symmetry is always meaningful. The russian president called his cabin together yesterday and said it is time to retaliate. He said we need to be sure we andect Russian Consumers producers. We do not know what he will announce. Speculation that one thing could be done is russia could pull or limit overflight rights. The rights for airlines to fly over russia. The fastest way to do that is through siberia. Of course, if russia. Right, that is bad for the airlines because russia is the worlds biggest country, 10 times zones across. That will mean a lot more fuel. We saw that reflected yesterday. All of them tanked, down about 5 on average. We have not seen many concrete moves yet. Russia banning the import of vegetables and fruit. It sounds like no big deal, but the russians say polish cabbage and apples are not up to snuff. The polls have a campaign in response to that. Sanctions beget sanctions. The word is that an applet day eeps and apple a day keeps putin away. I had not heard that one. That is amazing. It is a dark day for m a. 21st century foxx has withdrawn its takeover bid for time warner. Us now. Pbell joins we have a bit of imperial overstretch from both companies. This goes back to the romans. People try to stretch the borders of their frontier a little too far. These were extremely ambitious transactions. They both bumped up against reality and have collapsed as a result. Napoleon would have a few things to say about that. Are they done . Is it over . These are both over for now. One thing that distinguishes the u. S. From the u. K. Is huge on how to will yourself out for six months as you do in this country. There is always the chance these are tactical ploys. The consensus is that both of these transactions are on the shelf for the foreseeable future. If we extend the napoleon asked story a little bit, what happens afterward . Much into that . Is it a useful barometer . We always need to be careful not to stretch our historical analogy too far. The underlying businesses are very strong and will do other deals probably, but this is a big setback in both cases. The mayor of london gives a landmark beach right here at our European Headquarters. That is a live shot outside. Arrival. Wait his hell join us on the set as a breakdown the arguments about that brexit. See you shortly. Will come back. Boris johnson giving a landmark speech at our European Headquarters. Some shots inside and outside of the building. We are waiting his arrival. He will join us on set later. We will wait and see exactly how he arrives. That could be quite interesting. We will have it live for you. 3. 3 billion was what the market was looking for. That is what the bank has delivered. The Balance Sheet remains in excellent shape. 14, we sawalf of Financial Market income fall by 20 . Taking action to address nearterm problems. Shares a little volatile. Lets talk about what is happening here bloomberg. ,his speech by Boris Johnson the scotland story last night adding a little bit of clinical risk into the british Political Risk into the british pound. Good morning. Is the Market Pricing and enough when it comes to local risk . Is the Market Pricing and enough when it comes to Political Risk question mark is the Market Pricing in enough when it comes to . Olitical risk questio the expectations for Interest Rate hikes have driven sterling higher. Weeks,e past couple of we have seen some sterling weakening. The bar is quite high. Beat difficult for data to consensus expectations. Market may be getting a little shaky. Price it in . It is very difficult. You have no prior. It is unprecedented. The thing to remember about the scottish referendum, it can drag on for a long time. We had the referendum in september. What will happen with the assets and liabilities of the Scottish Government . Will they be transferred into the u. K. Debt . It is very difficult, but the important thing is that it does create an uncertainty. What will be most relevant is the run up to the referendums. Especially if we get a narrowing of the gap. It is only in six weeks time. Exactly. In the 1012 are between the no n a yes. The no and the yes. Implications for what will happen today. The brexit speech delivered by Boris Johnson. He can have a Significant Impact on policy. The two are not unrelated. How do i price that risk in . We do not have the euros obviously. How do i factor that into my and into my nearterm medium term thinking . There are risks to the downside. Usually we are talking about a 45 depreciation when you get that spike and risk. What are the possibilities and the probability effects of an increase from debt to gdp ratio . Potential downside should be between 57 . Qa very much. Thank you very much indeed. The mayor of london, Boris Johnson, is to arrive. Peopleee the various that will be greeting him. We await his arrival. He will deliver a speech. Set. Ll join us on we explore the arguments surrounding britains brexit. Welcome back. We are streaming on your tablet, your phone, and bloomberg. Com. Youre watching the live shot outside bloombergs European Headquarters as we await the arrival of Boris Johnson. He will be delivering a major speech. What will he turn up on . A bike . A i think he might go with boris bike. Lower, i have 60 seconds to do this. 9 . Ax down by troops on the Ukraine Border is concerning many. Retaliation, the big risk to watch. German factory orders, dont just blame it on russia. A decline of 10. 4 . That points to eurozone weakness. You will be covering troops e Ukraine Border is concerning many. Retaliation, the big risk to that for us tomorrow. Lets see. Coming up, Boris Johnson about to arrive. Otentially backing a brexit we will see you in a moment. Good morning. Welcome back. I am guy johnson. Putin says heimir plans to retaliate against international sanctions. The russian newspaper has reported that one measure could be a ban on trans siberian flights by european carriers. Factory orders dropped the most in 2. 5 years. Says it slidals 3. 2 in june. We will watch that story. Boris johnson is ready to push for the u. K. To leave the eu if David Cameron sales to achieve sufficient reforms. He will introduce a report showing that. We are waiting for him to arrive. After his speech, he will join us live in studio. Shot of the back of the camera crews. We will fix that. Will bore us johnson well Boris Johnson arrived on a bike . He is certainly making news in london. That is a oneway street. They could be pointing the wrong direction. Jonathan ferro joins me on set. There he is. Done the correct maneuvers when it comes to the highway code. Let him take off his bright yellow helmet. What is he going to say . Lets hope he has not forgotten his speech. He should be on a boris bike. Britain, itis about is about Boris Johnson as well. Which one is it about . Is it more about the politics . The title of the speech says it all. The euro report, a winwin situation. I think the risk here, if it is all about leveraging a very Serious Business and economic issue that the u. K. Could leave the eu, that is a concern. Boris, that about is a risk for the u. K. Economy. It needs to be about the whole of the british economy. Reforms realistic . What timeline will we give the eu . How long will we wait. All of those are germane questions. Does this feel like a negotiating tactic . Is it about the negotiation or is this a real plan a and a real plan be . A lot of people in brussels will be working that out for themselves. What is the alternative for sterling question mark without a plan b, you cannot go into a referendum with any balance at all. Eu,ould like to stay in the but we want a reformed eu. We will do this, this, and this. Question,s an open whether or not he will look to take a seat at the general election. Why do they want him back in parliament . It makes for a stronger conservative party. This is a man that since he was a teenager wanted to be the Prime Minister of this country. Beforeameron got there him. Does he still want to be the Prime Minister of this country . I imagine he probably does. Does he do next years general election . Does he keep his cards a little closer to is just . Closer to his chest . Survey. Prime minister . Serve a full term . The core issue is a business issue. They might be very concerned by the potential but this political issue, they will start think football with it. That is very important. We talk to ceos all the time. They dont want the uncertainty associated. Has he been talking about has he been talking to the ceos and what are they telling him . Are they getting the same message . This guy is speaking as the mayor of london. The city of london, there is been a risk of Regulatory Overreach by the eu. He wants to protect london and the city of london. Going forward, that will be a key interest for him. This is a piece in the telegraph. Right of center. Leave, we have to face the facts that most of britains problems are not caused by the british slothonic , low skills, a culture of easy gratification, underinvestment, and infrastructure. What has changed . Hasasnt changed at all it changed at all . Are the politics changing and that is why his views are changing . The british economy is generating strength at the moment. You have an economy that is generating growth. The fastestgrowing economy in the g7 and a lot of people would say fantastic. The problem is, we were lagging everyone else to come out of this recession. It has taken a long time. Hasnt given the politicians hasnt given the politicians a false sense of security . Most politicians in the eu would accept the argument that we need reform. The question is, how long will it take to get everybody on the same page . It may take a decade. Will britain wait a decade . There is a subtle realization that the u. K. Is not part of the party the way it used to be. The rest of the eu wanted it was because therell be more integration whether we like it or not. Further Fiscal Consolidation of the eurozone for that program to deliver what it was meant to deliver. Consolidation,l which implies some sort of political story, taxation without representation, maybe we move into a different whether the u. K. Is losing its influence in politics. Look at the budget. Issue. The juncker this is about regaining it . Maybe we will see him pushing some sort of economic czar which would make life harder for britain and the city of london. There is considerable upside if we were to continue to push the Single Market. Britain could benefit from a reformed eu. In to theen introduction that is being levered. Boris johnson talking about britains options in the eu. Looking forward to hearing from the mayor today on what the future of europe might hold. It has been 20 months since the Prime Minister laid out his vision. It is a privilege to hear from the mayor. The mayor has kindly agreed to take a few questions. Ladies and gentlemen, the mayor of the greatest city in the world, Boris Johnson. Good morning. Audience, a stunning audience. Superb to see so many people here. Thank you for the invitation. I want to thank my friend jared lyons for his excellent reports. A winwin situation. Optimistsf natures and i believe in finding good with everything. On sunday, i was flying back from a polish city in the mildly hungbout 300 over fans of speedway. They have come from all over. Polandved up to fly to to watch the british team. Elbowswe sat with our pinned so tight, there was no. Omplementary Inflight Service that ryanair plane was a quiet and sunburnt content. We sat there happy discussing. He finer points of speedway i thought that if i was a pr man for the European Union, i could make something of this. Flying bye were all ryanair . The eu made it possible with its open skies legislation and ushered flying by in cheaper flights from faces youve never heard of from places youd never heard of. A place that used to be kept in subjection behind the iron curtain. It was the eu that served as a former communist countries. It is transformed those economies and help provide the british speedway fans with prompt service, ice cream, and all the stuff you would not have expected under communism. Century since the outbreak of the first world war, we should reflect that for 70 of those 100 years, there has been piece in western europe. The longest uninterrupted absence of war since the days of the emperors. All sorts of reasons for that. Cite the role of nato, the triumph of Ronald Reagan and margaret thatcher. Somewhere in the mix, we should surely give credit to brussels for being a force for stability and economic integration. You might ask me, what is all the fuss about . What is the problem . Is the eu isyou suffering from a crisis of underperformance and collapse of political trust. The rest of the eurozone is mired in low growth and has been for years before the eurocrisis even struck. Between 1980 and 1988 come average growth in the area was 2 . Then it got worse from 19992012, 1. 5 . Ae euro had been turned into weapon of mass job destruction. In spite of all the talk of the corner having been turned, unemployment is stuck at 25 in people e for young and double that rate for young people for large trunks of Southern Europe large chunks of Southern Europe. We have levels of the Single Market is failing to deliver. Countrieseen eurozone is growing less fast than trade between those countries and the rest of the world, which is not what we were told to expect. This is the fault of the euro or the eu. Partly the fault of the European Social model. Observed,merkel has. E could not go on forever there is no doubt in my mind that it is the extra staff, the staff coming from brussels that we still have an expansionist Commission Culture in which they do too much of the things they ought not to do and not enough of the things they ought to do. The regulation is backbreaking. The health and safety and framework, written records of the risk assessments. The total cost of this legislation for eu generated employment for the u. K. Allowing his estimated to be about 8. 6 billion a year. Stuff isubt that this over prescriptive, let me give you an excerpt from the summary of the eu driving regulations for vehicles over 3. 5 tons. We are told, this is the law of the entire community, the driver must not drive over nine hours the day, the driver must take at least 11 hours rest the day. Of 45 hoursbreak every week. The driver must take the weekly rest after six days of working. You can see how that might work for big firms with big hr departments and a big cost base. How is it supposed to help a twoman startup that is trying to take on the big boys . How are we supposed to solve the construction boom in london . We have regulations like that one. Businesses have to register as waste carriers if they want to transfer a small volume of nonhazardous waste in their own van. Nurseries have to register as a waste carrier. Should replace them with Worker Protection that is more suited to this countrys needs. The problem is that we cannot do that. This is the fundamental problem with the eu. In thee stuff is there great purpose of law, there is no way a single parliament could revoke it. Handle, 50 of the u. K. Statute book. In the ee you, it is that since eu it is that lack of accountability that has reacted toxic leak with peoples others anxiety, notably about immigration. The city has benefited massively through immigration, but we need to have some controls. Over who we are getting. It is absurd that we should be kicking out australian nurses and teachers at excluding new zealand scientists. For students who t to come here from china we have to meet and immigration target only have no way of containing the number of immigrants from 27 other countries. What happened was the motors of spotted theeurope the voters of britain and europe spotted this incoherence. The nitrogen of antiimmigrant anxiety mixed with the skepticismof general. A rejection of parties and elites across the eu. How have they responded to that rebuke . Can you tell me what they have done . We have heard you, brussels. We understand exactly what you mean about bureaucrats who have no democratic legitimacy. Nckerhen they appointed ju in defiance of this countrys wishes. I do object to the way he was foisted on this country in defiance of the explicit wishes of the major eu state in a way that wouldve not happened 10 years ago. Reform is echo in the interest of the u. K. And in the interest of the whole eu. This is the case that is around the table in europe. We need to reform our social and employment laws. Resurrecting the opt out for the u. K. , i do not think that would be a bad thing. We need further reforms of the chp so we do not continue to waste taxpayer money and discriminate against third world producers. Sugar cane on threatening the jobs. Managed immigration so we know how many people are coming in. The london government can plan for School Places and welfare and all the rest. I agree with the dutch. They want 54 areas repealed. Should takethat we it back to and enter governmental arrangement intergovernmental arrangement. London is the Financial Capital of the whole of europe, an invaluable resource for all European Countries. I would like to see a real focus on completing the Single Market. I agree with the pamphlet by hugo dixon. We should strike out from the treaties the phrase ever closer union. Stop pretending to believe in the religion we dont believe in it. If we succeed in getting those anybody think those are excessive . If we get those reforms, we should put an amended treaty to the british people in the form of a referendum. Of ouret those reforms arrangements, relationship with the eu, i would be happy to campaign for a yes to stay in. Jared lyons argues in his report, that would be the single best option for britain and for london. Under that scenario, londons economy almost doubles in size over the next 20 years. Understand, and this is a key point in this report, if we cannot get that reform, the second option is also attractive. And god follow something for a new approach. I think we could do that if we did it in a friendly positive way. I do not think there is any need for hostility or rancor on either side. If we got it right, we could negotiate a generous exit securing access to the Common Market. They would have every motive to do such a deal given that the balance of trade is so very much in the favor of our friends and partners. That combination of a lower revelatory burden Regulatory Burden would help exports to boom and the whole thing would be turbocharged by new trading arrangements with major partners with less red tape for business and more competitive tax environment. It is being argued that british gp would grow under that option gdp would grow under that option by 1. 1 . I know thisll be a view that is widespread in the city. I do not deny there would be a scratchy period and there would be some shortterm uncertainty. I accept that. They said that before, folks. Dont you remember . Hey said that about the euro if we did not join the eurocom a the whole place if we did not join bureau, the whole place would collapse. Ink they will be believe over a 35 year period i met the adjustments would be made and people would realize the london on the u. K. Still offer superb advantages of times and, language skills, a massive concentration of talent and financial services. Many other crucial 21stcentury industries. Euh the savings and are budget contributions, there would be 10 billion pounds to be spent on other things. Parliamentary democracy in this country would have the adrenaline shock of rediscovered relevance. For all those who may find this top alarming talk alarming, i believe the eu question is no longer as pivotal for our future and for britain as it was. Old,e time i am 90 years which will be shortly after i finish the speech, i am the eu will have shrunk to about 9 of global gdp. I think it is surely obvious to as a modelhat the eu of how to do things, how to arrange things is increasingly out of date. There is no other group of countries that has gone into this painful pulling of pooling of sovereignty. Look around the world. This is what the 21st century people world is. No one is trying to do it this way. For very good reason. It is antidemocratic. You could still do so much in common. We could still have a common foreign policy. Look at what happened in libya. Whatever you thing of that operation, it was firmly opposed by the italians and germans. I seem to remember. It was entirely devised by National Governments working together. We can continue to Work Together whether we are in the eu or not. I want to stress that this is not my number one option. You,ke probably many of want to stay in a reformed eu. Consumerly serves the and business. Citizens and not of bureaucrats and politicians. A europe where our children can go to other European Countries and start businesses and find boyfriends and girlfriends, if strictly necessary area and [laughter] strictly necessary. [laughter] of opportunity. A cartel busting, market opening europe. A europe of mutual recognition. Where we get back to the sublime rather than the grinding mastication of regulation. In which we truly take decisions at the level they need to be taken. That is the vision of David Cameron and it is a vision of europe that i believe is worth fighting for. Crucial point. I think we can get that, i think we can achieve that. I think we can get it by 2017. But if we cant, i dont think we have anything to be afraid of going for an alternative future. A briton open, not just to the rest of europe, but to the world. Flying around the world, it is incredible, i see some of the people who have been with me, it is incredible to come across the affection, the ties, the historic links we have in markets with vast potential. With all the goods and services that london and the u. K. Have to offer and will continue to offer the world under any circumstances. Every single chocolate hobnob in the world made in brent. [laughter] hits asteroid that almost Sandra Bullock in the film gravity. Wherever they made . Made . Re were they if everyone is catching a bus in las vegas after a particularly hard night out in las vegas and you seek the shelter of a bus likely that the bus shelter you are using will have been made by a great london engineering firm. How about that . Bus stops to las vegas, folks. We export bundle must stops to block rain in new york bah rain and new york, as well. Beat that. [laughter] are the good europeans. Arent we . Particularly good here in london. We are the best of all. Londoners are the best europeans. See, thanks to transport for london, the best european of all, the body a chair, you will see on the buses , on the streets of london, buses owned and run by german companies, by dutch companies, and by french actually the french state. I say this directly to the commission. Can you in a million years imagine that the french would allow london Bus Companies onto the streets of paris . Can you . This is not a rhetorical question. I am asking you. It is inconceivable. Can you imagine that the french transport authorities would buy a london made bus stop . Can you imagine it . No. That is the europe i want to see. I want to see a europe where we can not only a export our bus stops to the america, to the growing markets around the world , but also to paris. With whom we have supposedly shared a Common Market for the last 40 years. That is the vision. I think it is a vision that is worth fighting for. It is worth achieving. Right, which im win we can, it is a win situation. Thank you for listening this morning. [applause] thank you. [applause] i think weve more or less covered it. Yes. Thank you for your speech. Your report says there should be a timetable for areas of reform in europe to read you think David Cameron should set one up . Gaza . Ask you about point, ion the second want to echo what the government has been saying over the last few days. Lets encourage the ceasefire, work on that. I think that is the best thing we can do there. Point, this ise something for the Prime Minister. Clearly lastvision year. He is going totally in the right direction, in my view. What i am trying to do is try to amplify some of the argument and give encouragement to those who think that we could be very successful in the negotiations ahead. If you want to reform, the best place is the house of commons and as an mp. Will you stand for it or not . We have danced around this anomaly long time an awfully long time. Has been veryster thatand he has been clear i cannot go on dodging these questions. [laughter] so. Let me put it this way. I have not got any particular see lined up. Seat lined up. In all probability, i will try to find somewhere to stand in 2015. It is highly likely that i will be unsuccessful in that by the way. You should never underestimate the possibility of things going badly. I will try that. Clear, i is absolutely will serve out my mandate here in london. Can we be absolutely clear . Like to stand as leader of your party . No. I dont want to revert to the kind of weasel mode. We have said Party Conference coming up in two months time. We could have this going on endlessly. Lets talk about europe, lets get back to europe. I have said what i have to say on that. The likelihood is, im going to have to give it a crack. If theres more on that, lets do it in a minute. Lets go to europe. Say that the best option is to stay in europe. He spent much of your speech saying that we should not be afraid to leave. The conclusion many people reaches that you will put your political ambitions ahead of the economy. Find that i think the worst option would be to stay in an unreformed the worst option would be to get out and have a stale, bitter, inward looking approach. The best option of all is to stay in and achieve the reform at we want. The Crucial Point is that we , if wenot be afraid cant get that reform, of seeking an international identity. Of engaging with the rest of the world in the way that we used to do. That is better than staying in an unreformed eu. The economic advantages of getting out in that case would be considerable. The figure of gdp growth could be in a stair estimate and underestimate. We have got to go into these negotiations in a positive and optimistic frame of mind. [indiscernible] my head and heart are united. [laughter] in divisively and theologically. And wanting to get the best possible deal for britain. There are two good deals that are possible. You could stay and reform or you could get out and have an open , which would also lead to considerable growth and opportunities, as well. You talked about the peasants revolt. This took place under the current government, not underneath the labor government. What has the current government got so wrong on its european policy . If you listen to the speech, before you pin this phrase has an revolt on me, i was referring to what happened around the conflict, or you had an uprising in every major european country. People felt that europe was to remote and unaccountable. Thed cameron is one of first to say that this thing needs reform. That call is being echoed in holland, germany, and it is boosted by the glorious uprising of the kind that we saw in may. I didnt say he got anything wrong. He has decided this country should lead the process of reform. It in a positive, friendly, engaged, and optimistic way, i have no doubt we will succeed. Would you agree that the premise of your speech is that we cant get change and then we should leave . Is it also not true that many people will not have read the fantastic communique coming out brussels, it could have been written by cameron. Seven of them have already been reforms. Even of the isnt the actual answer to this that britain should not be talking about getting out, but getting stuck in to achieve the reforms they have already agreed to do . You have the advantage there it is highly unlikely that all of the reforms of been agreed to that i laid out area where thaty agree with you i laid out. Where certainly agree with you [indiscernible] that is fantastic. As far as i know, there has been no agreement to but the home adjusters affairs back. Im interested to hear that. [laughter] we have already got the home adjusters stuff back to an intergovernmental level. Eu has believe that the struck out the provision. [no audio] what youre telling me this morning is that we have everything to play for and if we play our cards right, if what , we haves correct agreed the yellow card system and managed migration, that we can stop immigration if we want to, yes . Thisght as well continue negotiation. It is going very well. [laughter] i think we are almost there. Is that really right . [no audio] it is in the which manifest . We have to agree with everybody else. [no audio] i thought you said it was agreed. The Commission Work program. I think what we are hearing this morning is the ease and the willingness with which we are going to get our work done in europe, if what you say is true. Humblyct, if i may propose, that it is not going to be quite as simple as that. But if there is a will, there is a way. Powers ofrepatriate adjusters affairs and managed migration ourselves and do all of those things and complete the Single Market in services, if we can generally compete in Single Market services, then maybe we are going to win this argument. In which case, i will be all too happy to campaign. This shows the wisdom of David Cameron and leaving this argument. It is curious. How curious it is to hear so often that we are never going to get a deal. They say, britain hasnt got a hope. My friend from his think tank. Now youre telling us this morning that it is virtually a done deal. I think it is fantastic news. You said you want to complete your mandate as mayor. He doesnt not follow therefore that the seat you want to put yourself up to has to be within or do you think that you could stand on your own seat . I did represent a seat that was not within the m 25. This is very much a matter for the association. Im not going to presume to talk about which seat i will go for. You wanted to ask a question . [indiscernible] what is in the world talk about the eu when they mean that you the eu . Eu which we are questioning and not you. Thank you. I apologize for that equivocation. I hope it was clear that from what i was said that my remarks were not directed at europe. It would be impossible for us from any circumstances my friend, we are so right. We could not leave europe of we tried. [laughter] this is a european country. Put us out going to into the middle of the atlantic. We will stay in europe, where we have been for the last 500 million years, if not more. [laughter] dont worry about that. Last question. Im the chairman of the city. First of all, i would like to thank the mayor for such a spirited intervention into the debate. The mayor has been a huge supporter of london as a Global Financial center. I completely agree with what he has set out today. We have to balance the shortterm and longterm. Enter into a negotiation unless there are prepared to be a consequences if you dont succeeded not negotiation. Im very confident that reform is possible. Speaking to practitioners across europe, many of them share the same views as we do. I wish them good fortune in pushing forward these arguments. Thank you. Thank you. Thank you very much everybody. Thank you. [applause] you have been listening to the mayor of london, Boris Johnson, give a speech here at bloombergs European Headquarters. He will be heading upstairs in just a moment and he will be talking to me about a couple of subjects. His political ambitions. Britains place in the European Union. Not to be confused with europe. A crucial distinction, you will find. Nanas cranium Jonathan Ferro have been listening to the speech. Manus cranny and Jonathan Ferro have been listening to the speech. He will be running to be an mp. He cleared that one up. You want some ammunition about europe and reform . That speech was meant to be about numbers, about the economics of being in or out of europe. If you are watching it in is that, all you heard boris is going to stand, wants to be an mp, wants to be the leader of the party, this is about positioning him, this is not a serious message. This is about british politics, not about britains place in europe. I think you are right. I think it was very verbose to try to turbocharge the democracy and national politics. He wants europe to be a cartel busting, opportunity backing i could go on with the verbosity. What we perceive is wrong with europe. The driving regulation, the waste foreman regulation. Painting a picture of the tough things involved in doing business in europe. The nitroglycerin he referred to in terms of antiimmigration. Do you think all of this though, this is about perception and it is all about perception. He has chosen today he knew that question would come. He knows it will be in the front page of every single this paper tomorrow. Do you think the Evening Standard is going to lead with his vision for europe . No. They are going to know he is going to stand. The question will be, are you going to take the leadership of the party . He is very much aligning himself with the eurosceptic french of this party. If you are listening in brussels, all you heard was british political noise. I heard a different message. I heard the european message. He said he is running again. He is setting up a very clear opposition voice in the u. K. Independence party. Which is just politics. Nd, you have appealed absolutely to the right of the party and the grassroots. You say that he may be did not pay enough to mosh homage to numbers. He said it time and time again. To stay in europe would be the preferred option in terms of economics and jobs. Maybe he did not belabor that enough, as you said. We were all focused on him running for parliament again. Some of the language was very interesting. Lets be clear about something, another winner was the conservative party. Not just the far right back benches. The core of the conservative party wanted boris back for a reason. Not because of the fringe issues. But because of the issue around europe. This is a big win for them today. The immigration point, he made it very clear that the immigration policies have been somewhat skewed. Scientists, doctors, etc. And not really being a fair and equitable policy for the future. Not being the right policy on immigration to take the economy forward. He talks about the fact that we need to halt this program. We are going to take a short break. Alistair play you darling last night. He is talking about scotlands place in the union. , a currency was union without a Political Union is stupidity on stilts. , for theuropeans European Union, to get the eurozone to work, they need a closer Political Union. Can britain be part of that . The currencynot on basis. That is not the chosen route for them. Is it . We will leave that there. The mayor of london joins us now bloombergoor of the london offices. We are going to take a short break. We will carry on the conversation when we come back at the mayor of london. We are back in two. 5 minutes. See you then. Good morning, everybody. Welcome back to the pulse. Johnson has made his way upstairs to talk to us now. Good morning to you. Good morning. I made my way easily upstairs. Well, we have a lift. I asked them to turn on the air conditioning. Anybody listening to that speech in brussels and you appeal directly i appealed to my friends. There is an opportunity to change things and do a better. Then you turn around and instead im going to stand at the next general election. The timing appears fortuitous and interesting. I suspect many people in brussels will be looking at the speech and saying, well until he did that, he was making some good points. As soon as he announced he was going to be running to be an mp, the fact that he is aligning himself with the eurosceptic fringes of the conservative party, all they would have heard in that speech is British Party political noise and not a case to be made for britain. That is a fair criticism, if i may say so, of the timing. Im sure it was an accident. Well, it is. The euro per port has been line up for ages. Europe report has been lined up for ages. That i have been totally fed up with the endless pussyfooting around, mainly by me, over the subject. I wanted to clear it up. The two things are could unrelated. I hope the people in brussels and around look at that speech as a genuine attempt to get logical righta place for this country to be. I am not an antieuropean. I love europe. All of that. You agree that there was plenty in the speech that saluted some of the good things that the European Union has done. I think people listening to that will see that we are not coming to this from a perspective of complete negativity and hostility. We think the thing to be better. We think that you could recapture confidence among the electorate of europe. You could mobilize peoples support for it if you just made some changes to improve the way the whole thing works. On employment. On the bureaucratic machine. It has become way too intrusive. You need to have the yellow card system. I was delighted during the q a alighted maybe the wrong adjective. Delighted maybe the wrong adjective. It struck me as being very positive. He seemed to think. But it was already doable. Do you think the european has a desire to reform . There are those within the European Union, that are in the leadership, that have a desire to reform. Processthat is also a that goes handinhand with an ever closer union. Alastair darling said that a Currency Union without a Political Union is stupidity on stilts. That may be where the eurozone will want to try to go. For the Political Union. The difficulties they have had since 20072008 have been very acute. The whole exercise has been hugely difficult and painful. You got massive unemployment. Youth unemployment is catastrophic in the south of europe. Maybe, they are going to have to have very big fiscal transfers. Av they will have to go forward within the eurozone to that place. I think it would be difficult democratically. Project is the euro very well conceived. For the u. K. , that is not the issue. Were not going to be in the euro, North Denmark or sweden. Nor is denmark or sweden. There is a tension there. Work for it to you need relationships. To you think it is viable . I think it is totally doable. Changes that i was outlining, a healthy relationship by way of free eurozone and we are off to the races. If we can get those reforms, put them to the people in a referendum in the country, we have not had a referendum on europe for 40 years, 39 years, or whatever it is. The people of my generation have not had an opportunity. If we can get those reforms, i will campaign for aes. A yes. ,f you look at britain today the position of britain and the global economy, the future could be just as great and glorious. Many european leaders dont like being threatened. There is a sense they are being threatened. Is about thes eurosceptic french right now and about making threats. How do you get around that . I except that. Accept that. We should not go into this with a spirit of, we know best, we have some superior wisdom. We have to be humble in our approach. We have to point out some of the things where there is Common Ground around europe. The areas where things could be done better. We dont want to hold the pistol to people said and that should criteria. We want a friendly, positive engagement. For thehe argument whole European Union. Change is necessary now. The european elections in may indicated that. People want to see serious changes and reforms in the eu. Let me quote boris back to boris. Wouldid leaving the eu reflect british problems that have nothing to do with brussels. It would simply reflect the fact that problems are caused by chronic british shorttermism. The culture of easy gratification under investments. That was a year ago. Has anything changed . No. If you look at the whole wascle, what i was saying what i said this morning. There is an even better case for getting reform and staying in. The reform is important. It has to happen in the u. K. And in europe. What i was saying from a sentence that you so ingeniously plucked out of my piece was that neither leaving the du nor staying in are the beall and endall. Problems are not just to do with brussels. That is a mistake to think that. Our problems are about getting our skills levels up, educational system, all sorts of aspects of the u. K. Economy that have been well understood. We need to rebuild our manufacturing base. We need to make sure we have enough engineers. There are problems in the u. K. Economy. British ceo seven of problems to deal with without worrying about our place in europe. When you talk to british ceos about this, what do they say about britains place in europe . Do they worry that your push, your desire to negotiate hard is going to add to the uncertainties . They think the line that in 2000 or longer ago about the euro. You remember what it was like. Everybody was going around doing head as a chicken, saying, if we didnt join the euro, we were going to die. Gigantic mutant rats would come in on the faces. I dont remember the rats bit. Business hates uncertainty. Businesslike stability and continuity. That is a very rational approach for a businessperson to take. If we go for the approach i am advocating, i think there would be huge benefits for the city. If we can get to the renegotiation and agreement on london as a financial center, one of the conditions i have built up, it would be a great advantage to the u. K. Economy. There are lots of benefits. The status quo is something we need to change. If you are optimistic and positive about it, i think we can do it. We will live it there. Boris johnson. Thank you very much indeed. Be on hisson will bike. He parked it outside. We will get reaction from the speech delivered here today. We will be live with the chief economists. We will be back in a few minutes time. I dont object at all. Junker, but i do object to the way he was foisted in a way thaty would not have happened 10 years ago. That was londons mayor Boris Johnson giving a speech right here at bloombergs European Headquarters in the last few minutes. We have had the opportunity to talk with them in an interview, as well. What do we make of it all . If you were to listen to the messages that came out of that speech, there were numerous. Boriss political ambitions. A vision of europe of reform. Lets start with either. He wants a reformed europe. Door orshing at an open does it just so my political noise . I think what we forget too readily is that the problems of the eurozone are ones that should be addressed by reform. Particularly how the ecb is holding the fort trying to stabilize Financial Markets, but only until structural reform kicks in and the problem areas. This should be music to their ears in a perverse kind of way. Is that when you look at the message that is coming up from key appointments, that may not be the case. Once aaude juncker closer union, not a union that is more dynamic and easy to work with. Are the two incompatible . I dont think so. Im not going to be a political analyst on this. I think the people in the political posts are less important than the National Governments, which are going to run the show. I dont think he is antagonistic. Borisvery pleased with johnsons tone about trying to do this in an optimistic way. Up is reason i bring that because there is this concern that the eurozone, to function as an economic bloc, needs a fiscal element to it. Ascal element seems to imply political element, if you extend it logically. Hence the question about whether Political Union and federalism and the cosi europe can be extracted from making europe work. Closer europe can be extracted from making europe work. It ultimately needs that, and we are seeing that clearly in the unbalanced growth we are getting, the internal devaluation. Back intogone recession. All of these things need to happen. We need balanced growth and that implies federalism. I dont think you need Political Union to get the eurozone back on its feet. Unions. Banking unions. These kind of things can be done. At a measured pace. I think the kind of things that johnson is highlighting is that we need to see these reforms carried through in a way that dont jeopardize the position of one country. Nd where i think his emphasis is correct is that we need to remember, over and over again, that it is the Single Market, not just the eurozone. Single market is all about taking down trade barriers on goods and services. A lot more to be done on services. What i did feel from his speech is that it is really a manifesto for london. Very different economy from the rest of the u. K. London could survive outside the eu. Could the rest of the u. K. . Does the argument become a little bit more proremaining in the union . We could survive outside. And suddenly all of these competitive juices are going to start flowing, for some reason we have not been able to penetrate asian markets successfully, even though germany has over the same problematic time period. Suddenly, when we get outside, all of these things are going to happen. It is not as simple as that. If it were, why are we doing it already . To draw a line before between what we have been talking about and the Scottish Union debate, how do the two fit together economically . Lets take the worst case. If scotland were to leave and the u. K. Were to leave, that would be too profound dislocations a very least for the remaining u. K. Economy. Hurdle to be quite a overcome. That worries me. Very nice to get your views. Brian hillyard. Looks get more on what has been happening this morning. Russia, president putin, more troops on the border. President putin. Making the market nervous. We just heard from the polish Prime Minister saying that the risk of russia directly intervening in ukraine has risen significantly in the last dozen or so hours. That is according to the polish Prime Minister based on information he says they possess , saying that the risk has risen dramatically from just a few days ago. We are the foreign minister of poland yesterday saying that russia may intervene in the east of ukraine directly with Russian Troops under the guise of a peacekeeping operation. We have heard some noises from the russians about the need for a humanitarian mission in the east of the country. Keep in mind that there is a war waging their with tens of thousands of fighters on both sides. The Ukrainian Military is massing troops around the city nask. Netsk and lu the russians are expressing concerns that the russian insurgents, prorussian rebels in that city face an onslaught from the Ukrainian Military. Amassing of Russian Troops on their side of the russianukrainian border that has got international attention. 20,000 troopse is there. Ukraine says that there were 45,000 troops. Taking firey are from the russian side. We cannot verify that. Warnings coming from the polls. The risk of a russian intervention has risen significantly in the last will of hours. Having an effect on the airline sector. The russian president prepared counter sanctions, saying that Government Officials should be careful to make sure Russian Consumers and producers are hurt as little as possible. We dont know what the russian government might do. We did hear from one russian Government Official saying that overflight rights, the right to fly over russia, that is something that russia could retaliate with. It could revoke those rights for european carriers. That hurts European Airlines really badly. We saw that yesterday in share prices in general. Russia is the Worlds Largest country. It spans 10 or 11 time zones. Go around russia, that means a lot of extra fuel. Investors dumped those stocks. Thank you very much indeed. Ryan chilcote talking about russia. The the pulse will continue. Welcome back. You are watching the the pulse. Talk about news that came out in the last hour. What is going on . Dan, what is behind this move . It is a replay of yesterday. Rumors started circulating yesterday in the market that this merger, fiat chrysler, might be in jeopardy because of this mechanism of the shareholders that voted against the merger at the meeting last friday. They have the right to accept of cash payment instead going and giving up their shares for the merger. They have until august 20 to do this. They can accept an approach that is much higher at a price that is much higher than the Current Trading level. The stock fell more than 7 yesterday, propping fiat to put out a statement trying to dampen speculation. They have no indication that the limit which has been set, 500 Million Euros is what the others willing to pay to those who do not want to participate in the merger. They denied that that was in jeopardy. However, the stock is back down again today. Notes, expectt the merger to go ahead. The fact that it is trading is, is ayatt it trading down a decent volume . Are people taking this seriously . Is the stock is being pushed around a little bit worse this general and widespread concern . Concern. Here is some about 8 of the companys shareholding base voted against the merger at the Assembly Last friday. That is not enough to block the merger. Isfact, what could happen that if in fact enough shareholders were to participate in the cash payout, we could see the family stepping in to help me the threshold to push through the merger. Thanks for the analysis. The devil is always in the details. Fiat has just reopened. That is it for the pulse. Keep it right here on bloomberg television. Bloomberg surveillance is up next. We will see you tomorrow. Collet mergers and acquisitions in knots. Steps away from tmobile. Time warner shares plunge. There is a sharp Market Reaction is will engage russian invasion of ukraine. Will engage russian invasion of ukraine. Good morning, everyone. This is bloomberg surveillance. We are live from our World Headquarters in new york. It is wednesday. Joining me, scarlet fu and brendan greeley. Adam johnson is on assignment. To get us briefed on our morning brief, here is scarlet fu. A lot of Economic Data in europe. U. K. Industrial production rose less than forecast. In italy, gdp falling. This is the first day of way to the Economic Data weight to the Economic Data. A lot of red as a result. Not a lot in the u. S. That will move the needle