Good morning. You are watching the pulse. I am guy johnson. Francine lacqua not here today. She will be back on monday. Mark reckless of the u. K. Independent party has claimed a victory in the rochester parliamentary by election. Maybe a slightly bigger win was anticipated. , he madectory speech the point that ukip is gathering momentum. I wish i had the words to say how grateful i am. This is your victory. If we can win here, we can win across the country. If you vote ukip, you get you cap. Get ukip. Rec list affected to you cap from the conservative party. The chancesraises that more mps could make the same move. Speaking earlier this morning, ukip leader nigel farage praised reckless. These men have left the conservative party and had the necksge to put their on the line by forcing by elections. The kind of behavior we havent seen in british politics for half a century. Nigel farage speaking to anna edwards earlier. Rob hutton joins us on the phone from rochester. Good morning to you. We are in a situation where we are waiting to see what happens next. Rob, was this a big enough victory for nigel farage to be able to tempt a whole bunch of other on the wire conservative mps to jump ship and join him. That is a really, really good question and it is on the cusp of the answer to that being maybe. I think if it had been a doubledigit percentage lead, then the answer would have been yes, quite possibly. It is about 7 . So we are not quite there. Now, they dont have to have a by election. No member of parliament has to have a by election if he switches parties. The feeling was that douglas cos well, having announced he was doing that in august, anyone following him was obliged. Now that the general election is so close, that obligation has probably disappeared because the government controls the timetable for by election. If a tory mp were to resign and say, im quitting, im joining ukip and quitting parliament, the government could say, the general election is made. We wont bother having a by election. You would just be out of parliament. That said, the really big question that people are asking in rochester is, has reckless won by enough to hold the seat in the general election . Benefited, he clearly even ukip would agree with some kind of protest vote. The people who voted for him, how many of them plan to stay with you cap at the general election and how many plan to go home to their parties when it is time to actually pick the government . The tories will be saying to 7 . R mps, rather more than ukip saying, no, we are staying. The answer is, nobody knows. Voting is slightly habitforming. The you have voted ukip and sky hasnt fallen in, you do it again, maybe. On the other hand, maybe you dont. Yeah. [laughter] sorry, that is a very equivocal answer. Something to ponder. The big story to my mind was maybe even more significant in many ways. What happened with the labour party overnight. How onaced tweet earth did the labour Party Managed to extract defeat from the jaws of victory . That is a really, really good question. Another question that had people clutching their heads last night. Thornberry on the campaign trail here in rochester yesterday, sees a house covered in crosses of george flags and decides to tweet a picture of it with just three words attached. Picture from rochester. The question that was given and the impression largely confirmed by the fact that she resigned was that she was sneering at workingclass voters. That is a real problem for labor. , we now its message is speak for the working class. Reckless lost no opportunity last night. Problems a perception among some voters that it is perceived as being a bunch of metropolitan liberal elite londoners. A tweet like thornberrys did nothing to help that. Labor, dont forget, you to hold this seat. They say this is a seat they win under tony blair. The only thing about that kind of thinking is, it is slightly defeatist. If you keep looking at a by election and saying, that is not really the kind of place where we win, it turns out that is not the kind of place where you win. An Opposition Party with an unpopular government ought to be picking up by election seats in strange places. Doing that is is ukip, not the labour party. The blows just keep on coming for the mainstream parties. Livedems. That was very much in the price. I was looking at my spreadsheet last night. The ground up to one cent or down to zero. The good news is that you round up. The good news for them is that they werent beaten by any of the joke candidates . Is a very good a warranty miami episodes and i dont accounted for 0 . They are a party that used to pick up protest votes. It used to do very well in high elections. It is now just being wiped out. One of the Big Questions, one of the many Big Questions we will is, as going into government completely destroyed the liberal democrats had it just got back a great deal in their number of seats . They held easily. Theyve held seats where they already had it. But what they are not doing is picking up seats. They can no longer claim to be a party of protest when they are in the government. Interesting to see who the swing party is going to be. Could still be the libdems. Thank you very much indeed. To have more on this story throughout the morning. We will continue to analyze the situation for the british political process and also for what it means to British Business as well. What else is on our radar . Two of the worlds bestknown investors in business together. George soros has invested in pimco founder bill gross accounts. Lots of tweets on that story. Boris johnson could be on the in the United States according to the financial times. Johnson who holds a u. S. A british passport, is being pursued by authorities for the sale of a home in london. Ft quotes johnson as calling the demand absolutely outrageous. You can hear him saying that, cant you . Some of the most important figures in european banking are gathering in frankfurt for the european banking congress. Banking unions will be one of the main topics of discussion. Mario draghi said the Economic Situation in the eurozone area is pivotal. Inflation is the focus. We are expected to hear from the Bundesbank Bank president in the next minutes. To say draghi was dovish, something of an understatement. To get a sense of how dovish it eurodollar down below 1. 25. 1. 2 469 was where we got ourselves pushed too. Take a look at what happened in his home country of italy. Pushed down to record lows on the 10 year. Of fairly good morning to work if you are trying to continue to flatten the curve. Not a bad morning. We will hear from vitamin shortly. We will get the other side of the coin. In the meantime, we are going to take a break. When we come back, we are talking about ukip. Int does the big win rochester mean for britains future in the eu . We will discuss this with Phillip Blond coming up in just a moment. Welcome back. You are watching the pulse. We are live on bloomberg tv, on the radio, streaming on your tablet, on your phone, everywhere. We are on the political trail this morning. Ukip taking another by election, this time it was what was once red a stronghold. Mark reckless becomes the second member of the independent party with a seat in parliament. I think he is still on the train on his way to parliament to be sworn in. Joining us now to discuss the implications of the win is respublica director and founder Phillip Blond. Lets deal with the immediate and then we will have a discussion about the wider implications of this. The immediate effect is, what . Do we get a series of defections or is this a more isolated case . Will bolster this David Cameron. Even a few weeks ago, everyone won, this ukip would lead to defections. I think the results are too narrow. Will cause people to think twice before defecting. Even though it is lost, the gain is of ukips leveling off. Paradoxically, i think the real losers from this are the labour party. What ukip is doing and emily turnberrys ridiculous tweet only helped that, is repositioning. They are now targeting themselves for workingclass votes that labour traditionally got. R in the millions. Have eaten, the fmp away up to 70 of labours vote. Cameron,takeaway is, paradoxically, is more secure. The shift isnt big enough to encourage others. The person who looks really insecure is ed miliband. The labour Party Looks Like it has a tenuous hold on its own base. Ukip is doing a master strategy. It has captured the concerns of the voting base and it is now going after the labour voting base. Which kennedy road the most . Which can it erode the most . Seewe are going to start to this. Do you think they take more away then theur conservatives . No one can calculate. It takes away from the models. What ukip is going is broadening its base. Think, exactly right, this momentum against the conservatives is starting to level off. But its momentum against labour is starting to gain ground. Mightk that is why ukip really be the game changer. All the predictions even a few months ago, people were talking about 20. When you are looking at the libdems falling to 20 or 30, ukip could be an equal gain maker with the liberal democrats. Tt could be a contes between fmp and ukip. Has movede by ukip the conservative Party Leadership increasingly towards the eurosceptics. Shiftsee similar kind of within the labour party in terms of a significant policy reevaluation . Do we see them backing and in . Ut referendum where is the policy change . Europe isnt even the top factor for those who vote ukip. The top factor is their own sense of economic insecurity, which israel. Increasing numbers of middle class people are losing out from globalization. Standards, looks like decades before it catches up with what they were before the recession. For workingclass people, they have been in decline for 30 years. Europe isnt the key message. If europe becomes identified with economic decline, which it europe couldlly gradually rise up the agenda even for the labour party. Is the line between the two immigration . That increasingly appears to be the battleground. What you have got is people who have done well out of globalization. People who live in london, the metro elitists. The rest of the country where immigration is viewed as, people take our jobs, change and challenge our cultural identity. People should look very carefully at Douglas Carswells acceptance speech. The notion of taking your country back resonates with everybody, young and old. Expectfeel they could what is no longer there for them. The older generation feel they are no longer represented. Remember the ads about you cap is the people with less education none of that works in rochester. Levels ofaverage employment, average levels of education. Think, isappened, i globalization has started to undermine the middle classes. Developingbroad and and expanding constituency for ukip. If they can persuade those people that europe is identified with globalization, there is every chance people will vote against europe. If people vote against europe, what that will do is have an effect it exposes you to globalization even more. That is the point. If people vote against europe, britain will be in a worse position. Economics suggests we will suffer anything between the impact of the scale of a recession we just had to twice that level in terms of the loss of market and gdp. A lot of businessmen sit in the seat you are sitting in there is a constituency within the Business Community that talks about needing to leave the eu. But there is a big number of Large Companies that talk about the fact that britain needs to remain within the eu. Youve just encapsulated the must be got across. How does business communique that . How do the policy leaders communicate that . It is terribly difficult. What is happening is that europe is being ruined by the euro. The euro is plunging. Whole of europe is in various levels of deflation and recession. Ukip type movements are already alive across europe. I think we could be looking at the mediumterm breakup of the euro. That is probably a good thing. I think the euro as an economic model only works for germany. Even then, doesnt work for most germans. They have the highest rate of any quality between the bottom and the needy him the medium level. That may be more to do with the reforms than the euro. It is to do with the fact that they can export their labor market without relative cost across europe. Is the euroseeing as a carrier of the european project is failing. In that case, i think ukip will find common cause with many other european parties who wish to break with the eurozone. The breakup of the eurozone will make what happened to Lehman Brothers look like a cakewalk. Either way, it seems the headwinds against any sort of Economic Growth what advice would you give the Business Community that says they want to remain . Howd you get that message out . We need to create a viable europe without the euro. We need to create an exit strategy for those country suffering under the euro. Business lobby communicate to the british cost and the implications of leaving the eu and the fact that you expose yourself to even greater headwinds from globalization . I think business organizations need to realize that in the absence of strategy, they have to come up with it. What we have in england at the moment is a very poor debate. In or out. Going out would be worse. In the absence of a more sophisticated strategy, step into the vacuum and start to talk with other european businesses and parties. Create an option whereby countries can leave the euro but not lead europe. Generally, good ideas win. The ideas in control at the moment are so poor, are leading to such longterm economic depression, and causing the rise of political extremism. What business most hates is uncertainty. What generates uncertainty is political ruptures. They are so enormous, we nearly lost the union in scotland, but we are going to lose the European Union and the people coming in are very extreme left and right. Philip, great to get your analysis. Respublicas philip blond. We are back in a couple of minutes. Coming up king digitals candy crushed. Can the maker of the popular mobile game deliver a sequel . Welcome back to the pulse. We are here in london. Im guy johnson and these are the Bloomberg Top headlines. The u. K. Independence party has won it second seat in parliament. Mark reckless claimed victory in the by election gaining 42 of the vote. The ukip victory has been widely anticipated. Some would say it is a rebuke for the government over its policy on europe. Laidnight, president obama out plans to allow around 5 million Illegal Immigrants in the United States to avoid legal jobn and obtain status. The measures include the streamlining of the visa process for Foreign Workers and employers, and expanding the options for farinacci burners. Obama defended his actions against claims that he is exceeding his authority. The actions im taking are not only lawful, they are the kinds of actions taken by everything a president for the past half century. Members of congress who question my authority to make our immigration system work better, or question the wisdom of me acting where congress has failed, i have one answer pass a bill. Now, the british chancellor George Osborne is abandoning his bid to overturn the European Union ban on bankers bonuses that exceed twice annual salary. Osborne said he wouldnt spend taxpayers money. The arguments were rejected by a senior official at the eu court of justice. King digitals games are played by hundreds of millions of people. Now, the maker of candy crushed has released a followup to the hugely successful franchise. Help prove this company is more than a one trick pony . Caroline hyde. First of all, tell us about the new game and how it is using the power of the candy crushed brand. It is using that same pony. It is dining out on the success of candy crush saga to develop a sister game. Slam a bit of soda, turn gravity around, and make it more exciting. Of course they are going to dine out on the candy crush brand. It has been so successful. It is one of the Top Grossing Games ever, since it was released two years ago. It has been played billions of times. They are marketing hard. Last night, tower of london, we saw giant illuminated replica candies floating down the river. You had nicole shares in her of purpleunch a sea soda as a special fountain display. Get this, a sevenmeter high candy there as well. So far, this is a company that has not managed to recreate the winning formula even though it has released of her games. Other games. What is it that is in here that is going to deliver . I think the fact that they have decided to throw away the old tactic of promoting new sagas. They have launched relatively successful games. Farm hero, pet rescue, all of them basically in the Top Performing apps. Games in the top 50 at the moment. Isll, candy crushed saga basically their big winner. It is where the big cash is. 50 of their money comes from candy crush saga. But we are starting to see sales ease off. We saw profitability down by 38 . Candy crush saga is starting to slow. They are bringing in this new game, promising a wider pipeline of games. We have a lot of new games yet to be launched. It is about the network of games rather than a single game. We have a lot of games coming to the market next year where we will look at other types of games. They are trying to alleviate investor worries by dining out on candy crush this time around but they promise a whole pipeline of new games. Perhaps not just casual games anymore. I asked about virtual reality. They said they would be very keen to get on the back of that. What is happening worldwide . Geographically, there are differences. You look at the way the Japanese Play games, the europeans, there are subtle differences. What is the big story here . Ask you are right. Sagady, candy crush soda is number one on the apps list already. But what about Global Expansion . They have caps on repeating to me that it seems eight and other emerging markets are crucial