Transcripts For BLOOMBERG The Pulse 20150508

The labour party takes a beating. Those are pictures of David Cameron arriving back at 10 downing street earlier on. How are the markets reacting . Jonathan guy, you saw the fx moves. Sterling stronger. You see the move here on the bloomberg terminal. Theres the exit poll. The pound surging not just against the dollar, against the euro as well. Heading for the best day since 2009. Dont just call this a tory bounce. This is about certainty. I go straight to one week volatility. The pound against the dollar. You see the expected price swing coming forward. What you see there is the scottish referendum. We outdid that. We went much higher. Then you see the falloff. The certainty is giving sterling a left. In the equity market, much more about policy. You look at the ftse 100, pushing higher. The ftse 250 exposed to those domestic stories putting pushing much higher. The individual stocks tell the story. It is about the absence of labor policy. No rental cap, no mention tax. I look at the banks. No increased bank levies. Lloyds up 6. 3 . Berkeley group loving this news. Up 9. 63 . You see the move in the fx market. Eurosterling is one thing. Cable, quite another. As you recall, the stock reaction, much more about policy. Guy thanks very much indeed. We need to keep you updated on what is happening with the markets. Manus cranny is at the touchscreen. What is the latest . Manus we are at 309 votes and counting. This is how the shape of 2011 britain took hold. The domination of the tories in the heartlands the south of the United Kingdom. They are on target for 329 seats. It was a labor of violation in the area below me, scotland. Lets run you through the numbers. 309 seats for the tories. Where have the labor seats gone . 228. 56 seats to the snp, the Scottish National party. The pollsters were never really quite sure how the percentages would draw down. As we stand, with 25 seats to run on the national level, 36 of the vote goes to the tories 30 of the labour party, and just under 5 of the Scottish National party. Ed balls, born in the same year as myself 1967, he entered the United Kingdom political fray back in 2004, when he went into the westminster position. Lets take you into thats constituency. These are the results. Labour has had the tories took it. 39 of the vote. Have a look at this. That is a much lower turnout than we saw in 2010. That has really taken hold in terms of the news flow. Going back to the map, we talk about scotland, and the whitewash with labor and the Scottish National party. Let me take you into the heart of scotland. Alexander, one of the liberal democrats, he made it clear that he would have a tough job on his hands. This was his constituency. These are how the numbers went. You saw the Scottish National party taking nearly 10,000 more votes from the liberal democrats. Alexander is out. We are seeing the snp exceed the power there. The voter turnout here, lower than we saw in 2010. Voter turnout around 50 . Back in 2010, 74 . Drew henry is the new mp in that area. We will draw to a close on our journey. The interesting fact is this. It is about the southeast of england. We are waiting to hear about nigel farage and whether he will exceed to a parliamentary seat. The critical thing about the reaction coming from ukip is really the swing in the vote. We will come back to that in a moment. As i say, the whole emphasis of the map has been this swing. You hear a lot of people talk about ukip and the votes have moved away from ukip. Bear in mind, they may not have one bank such an exceptional number of seats, but they can me close in number two positions. 390 the tories. 228 to the labour party. 56 seats to scotland. Guy manus cranny on the latest seat count. Judging by the number of tweets coming from victoria and labour party headquarters, anticipation is growing that we could see ed miliband arriving soon. In the meantime, lets talk about David Cameron, set for a second term in power and a majority in the house of commons. The tension will turn to his promise of a referendum on eu membership for the u. K. , a promise he pledged to keep. Prime minister cameron we should never dodge the big issues, whether it is dealing with our deficit, holding that referendum which we were right to hold on the future of scotland, or in the future, that referendum we must told to decide britains future in europe. Guy David Cameron now at downing street. Thats where we find Ryan Chilcote as well. Walk us through the rest of the day from David Camerons perspective. Ryan the british Prime Minister will head to Buckingham Palace. That is where he will meet the queen. That kicks off the Prime Ministers job of forming a new government. If polls are right it will be a majority government. It will be a conservative government. Thereafter, very important you heard from the Prime Minister, talking about the Eu Referendum. The biggest challenge is to prepare the u. K. For a referendum. This is something that David Cameron probably didnt want to do, but proposed having as a response to some of the more nationalistic sentiments in the country leading up to the election. He first will go to brussels, no doubt, and say, we need to renegotiate our relationship with you. You need to give us a very good deal. We are going to have a referendum as he reiterated, by the end of 2017. I need to go back to my electorate with some concessions whereby they are comfortable staying within the eu. Not just the electorate. Theyre all those backbenchers the members of his party that think the conservative party, the United Kingdom should not be part of the European Union. That is a challenge for David Cameron. He had a huge mandate in this election, beyond anything he could have hoped for. That doesnt mean it is going to be an easy five years. Guy ryan, i guess we are trying to figure out when that referendum will come. A lot of people questioning whether it is as late as 2017. Someone argue that maybe cameron acts early delivers some of the big choices he wants to make early in the political calendar for the next parliament. Ryan his commitment is to hold it by the end of 2017. But you are right, he is going to want he doesnt want the u. K. To exit the European Union. Is going to try to time the referendum and control the wording of the referendum in such a way that the chances are least that that will happen. He has reiterated his commitment to that and now he has to stage manage the whole process. Guy thank you very much indeed, Ryan Chilcote from downing street. Lets figure out what this all means for the eu and the u. K. s relationship with the eu. Lets go to brussels. The heart of this story. Ian what kind of reaction can we expect . What will be the view from brussels, berlin, and paris . Surprise. They were following the opinion polls like the rest of us. What does cameron without the moderate libdems mean . I think they are going to be glad that the uncertainty is over. More than anything, they are not going to give cameron everything he wants. Guy do you think the view in berlin will be different to the view in brussels . Ian i do. The European Commission is a protector of the european treaty. The founding principles of the eu, such as freedom of movement of people which cameron wants to negotiate on, they protect that. Angela is more of a pragmatist. She sees the benefits of the u. K. In the eu. She sees what an open trading country like britain can do to the rest of the eu countries. I think cameron can see berlin as a bit of an ally in this. There are shades of gray. It is not black and white. Guy interesting to put the greek story into the mix as well. That may reorient the priorities. Thank you for your time this morning. I want to take you to some live pictures. We are going to take you down to live pictures from outside the labour party headquarters. We are anticipating that ed miliband will be arriving very shortly. He made his way down from his constituency, down into the heart of the westminster story now as he tries to figure out his political future. Hes lost one of his closest colleagues, and walls ed balls losing his seat about an hour ago. His future very much in doubt this morning. Guy welcome back to Bloomberg Politics. We are live from london. Let me walk you through some of the key top stories. Syngenta has rejected a 45 billion takeover offer from monsanto. Syngenta says the offer undervalues the company and a merger would carry significant execution risks. U. S. Nonfarm payrolls are due at 1 30 p. M. U. K. Time today. They are expected to show 230,000 jobs added in april. That follows the smallest rise in more than a year. And, the chief executive of lafarge has said he is very confident that talks with shareholders will approve the merger as hpolcim shareholders are due to vote on the deal. Lets get back to the u. K. Story. The big story for markets this morning is what happened overnight in the United Kingdom. The conservatives look like they are able to secure a majority which is significantly different from what the polls were predicting. Equities have popped. Sterling has risen. I think the story starts to get more nuanced now, doesnt it jon ferro . Jonathan i think each individual asset class had a different story. The equity market is about policy. No labor policy, good pop for the house builders, banks, and bookies. Sterling, much more about certainty. You see the volatility dropping off. Going into the jobs number for cable, i think that is pretty punchy. The guilds moved. Yields were lower. This one is interesting for me. Going into what could be a majority, that is a conservative government that can tighten up fiscal policy, push through cuts. It means the bank of england could keep things looser for longer. In a fixed income market, this is where the big debate is. Equities much more obvious. The gilt market, some nuances. Guy and what youve seen is the gilt market softening a little bit. We were down 8, 9, 10 basis points. We are now a little bit firmer on price. I also wonder how quickly the market is going to move from the euphoria on the trading floors that weve seen overnight to a point at which they think, what discount do i need to apply for this Eu Referendum . Jonathan the rally is like holding a beach ball under the sea. I was having a coffee downstairs with francine lacqua. She will be on the air later. She said to me that they may have to bring that referendum forward. Francine has a good point. They do have to bring that referendum forward and get rid of that all uncertainty. That is another thing to think about going forward. Guy may be some more uncertainty being cleared up. The bbc is saying that the labour party leader, ed miliband, will resign. You are looking at live pictures of what appears to be the floor somewhere in victoria just west of westminster. This is where the u. K. s labour party has its headquarters. Ed miliband making his way down towards labour party headquarters. After such a significant disappointment, your heart must go out to him from the point at which the polls were saying, there he is. He is just beginning to arrive. Actually these arent live pictures. Those are pictures earlier on. The polls were really pointing jonathan the pollsters were quite clearly way worse at their jobs than some others. Maybe a little bit more credit to the city of london. When we look at the politics and strip out the noise, everyone will say, the winner must have run a good campaign, the loser must have run a bad campaign. If you look at the labor campaign, they did a fantastic job of convincing part of the u. K. That every job was a zero at contract. They did a brilliant job of taking this u. K. Recovery and twisting it into maybe something it wasnt. I dont think you can do this by binary winnerloser. Guy we will leave it there. Thank you very much indeed. Bbc reporting that ed miliband will step down as leader of the labour party. Lets talk about the Market Reaction again. Jasper joins us from cmc markets. We are through the bounce, the initial euphoria that the markets seem to have priced in. Sterling pops higher. Now, as you start to think about what happens next, how different do you think the market story evolution looks . Jasper i think thats the big thing here. Weve seen a massive reaction in u. K. Stocks. That sort of makes sense to some degree. U. K. Stocks have been underperforming. European equities have been bolstered by qe in the eurozone. Are u. K. Stocks about the catch up . They need to hold onto these gains. The ftse 250 is near record highs. The ftse 100 really close. This could continue some strong gains for the market. Guy do you think there is going to be a significant discount applied to the biggest stocks with relation to this possible referendum now becoming less possible, more likely for the u. K. . Jasper i think some of the players that have done well today are the more interestbearing the likes of utilities and so forth. We are in a low Interest Rate environment. These stocks have been held back by some of the threats of the policies under the labour manifesto and are popping higher today. I think there is more room to go. Some of these more stable names particularly high dividend players, are going to look rosier than they did previously. Guy jasper, thank you for the update. I want to take you out into the break with a live shot coming from victoria, outside labor party headquarters. We are awaiting the arrival of ed miliband. As soon as we get those shots we will bring those pictures. In the meantime, we will take a break. Guy welcome back. Let me take you back to victoria. We are all waiting the rival of ed miliband. We are anticipating that we will see him step down as leader of the labour party. We are also looking at leadership questions surrounding the libdems. All of that expected to maybe wrap up today. It is going to be an interesting day. Let me tell you what weve got coming up. Plenty more market coverage. The focus right now is british politics. And the referendum we could see. We will speak to the founder of gml a man who actually is fairly in favor of this referendum being part of our Political Landscape. What does he make of this referendum threat to British Business . We will talk that through with him very shortly. See you in a moment. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Guy welcome back to Bloomberg Politics. Go we are here in london. Im guy johnson. Let me talk you through the top stories. Syngenta has rejected a 45 billion initial takeover from monsanto. Syngenta said the offer undervalued the company and the merger would carry significant execution risks. Billion early caching attracted investors from canada and the uae for the hutcheson o2 acquisition that creates the largest wireless carrier in the u. K. And weve had more evidence overnight of chinas economic slowdown. Exports declined in april and imports slumped. Overseas shipments fell from the yearearlier. That some of the top corporate and economic stories. Let me take you to the political story, which is centered on the u. K. One of the big elements of that story happening in scotland, where Tom Mackenzie is standing by. Tom over to you. Tom thank you. A Seismic Shift in the Political Landscape in scotland. 56 seats out of 59 for the Scottish Nationalist party and one each to the liberal democrats, conservatives, and labor. To get a good sense of what has fed into this shift in scottish politics, im joined by dr. Mark shepard. Thank you for your time. What is your take on what has happened here which is quite incredible . It has been building over a number of years. In 1992, the conservatives had a majority only 25 of the vote here, it is worse now. Theyve got 15 . We have seen that overtime. Everyone thinks they cant do it at westminster, but the referendum changes that. We get a sizable turnout. You get a mobilization of support, and the organization is there, the membership is there lots of Ground Troops the young people interested. Certainly a little bit more left wing. Overall, labor and the snp are quite similar in scotland but the perception was the snp were more old labor than labor. Tom what does it mean for labor . Can they rebuild . It is difficult. Scottish labour didnt want to have jewish mps. They are trying to do things differently. But i dont think they can do things differently enough. Theyve got to try and please the labor voters in scotland. It is a difficult divide. Tom the snp go down to westminster with 56 mps. They have to please their voters as well. They face a challenge. They dont have the labour party to work with. It is going to be the tories. How will they pull it off . Theyve said they are going to be a strong voice for scotland. I think the current position there must be Something Like a constitutional convention. I cant believe that the current proposals will stand. There will be added pressure, given the mandate in scotland. I think the labour party and the conservatives should have done this a long time ago. Theres only two ways to save the union, federalism or independence. The liberal democrats have got a solution, which is federalism. They need to be thinking about federalism and a way of doing this. There needs to be a constitutional convention. It wont please the electorate up here. Weve got 2016 coming. The s p you could say, doesnt have much power. But they do have that leverage constitutionally given there is a 2016 election. If westminster does not respond you will see the same thing in 2016. Tom talking about Electoral Reform in britain youve seen parties like you cap getting around 4 million votes ukip getting around 4 million votes and only getting a single seat and the snp getting 56 seats. Weve got various models to draw on that we could make use of. We were able to try the electoral system. We need to be thinking about those multiple constitutional questions. The electoral system is one of them. Europe is another question. The next five years are going to be dominated by constitutional issues area issues. Tom Nicola Sturgeon says this is going to bring everyone together. That is not the case, is it . We are looking at great uncertainty for anyone looking to invest here. I think there are similarities between some voters in england and Nicola Sturgeon. She does have a fan base down south. There might be issues around the issue of independence. I think the snp will almost identify with the labour party. There is Common Ground. It is whether that Common Ground can be maintained at the english level. Maybe the Labour Party Needs to move more towards the center to get that vote back. They were disadvantaged by the ukip vote going back to the conservatives. Ed balls, for example, very tight races. I dont think miliband helped. Tom how do the conservatives play this one . Do they freeze the snp out or do they work with them . We go back to the legitimacy issue. Weve got a huge democratic deficit in scotland. A lot of people say it is like 1992. It is a bit different. Back in 1992, the conservatives in scotland got 25 of the vote. They have now got 15 of the vote. They are in a better position to leverage. I think the conservatives have to play this carefully. In a way, the one nation message should have been there far earlier. Tom i have to cut you off. Thank you very much for your time, dr. Mark shepard. Back to you in the studio. Guy thank you very much indeed. Live pictures coming to us from labor party headquarters. Ed miliband arriving at labor party headquarters. Cheers, a lot of people clapping , but a strong sense of disappointment. You can see the look on his face telling the story as he walks into the party quickly. A smile, but it looked incredibly forced. The question now surrounding his leadership of that party how will the party work through this difficult period . The labor leader expected to resign according to the bbc. We will have to wait for news of that to be confirmed. We are looking to hear what is going to happen with nick clegg. He held his seat, but his party taking a significant loss in this election. We are going to take a break. After that, we talked to john mills, a man interested in an Eu Referendum. Guy welcome back to Bloomberg Politics live in london. Lets recap the numbers. What has happened overnight . Manus cranny at the touchscreen with more. Manus 21 seats left a report in election 2015. The conservatives on 315, labor on 228. We understand that ed miliband will speak at noon. The s p has 56 seats snp has 56 seats in scotland. Down goes the chat of chancellor ed balls. Down goes vince cable. Lets talk about the other potential changes in 2015. Ed miliband, head of the labour party, will he remain at the party . We are also hearing that there may be other questions around the liberal democrat leadership. Sources tell us this is one of the lowest polling of the liberal democrats led by nick clegg in almost 25 years. Eight sitting mps at this tally. Annihilated in scotland. Wiped out in the south. That is the state of the leadership. The changing face of westminster. If the tories had woken up having to negotiate, this man potentially sitting with very little power and potentially going labor, if the characters were the king maker of labor the rainmaker of the democrats. Lets take you around the map of the United Kingdom. This is how election 2015 started. This is number 10 downing street before the numbers came in. The tories came home to roost. Up here in scotland, you are seeing the snp . Labor had the worst results since 1983. I want to take you on a trip now, to the southeast of england. What we understand is that senna south is being challenged by nigel farage and is in multiple recounts. This result was supposed to come in at 6 00 this morning. No sign of it yet. Lets take you back to scotland and show you the annihilation that has happened. Theres one tory seat left north of hadrians wall. You love it when they say they still maintained their performance. This is a map dominated by the liberal democrats. Lets take you to the heart of glasgow. Not bad. 52. 4 . 20,000 votes. Allison sullas will be the sitting mp. Lets take you back to some of the data points. 313 seats for the tories, 228 for labor, 56 for the Scottish National party. In terms of the vote, this is when you begin to understand how the voters struggled to turn percentages. This is the National Vote bus far. 36. 5 of the tories. 30 to labor. Just under 5 for the Scottish National party, but getting those seats, 56 seats up in scotland. How did they do relative to 2010 . These are the changes up and down. As you can see, the swing factor has been in the snp. That is where the swing factor has been. Ukip swing factor up 9. 5 from 2010. Despite this slight uplift for labor, it hasnt translated through into the votes. With that in mind, these are the images you want to keep an eye on. Will he stay, will he go . That is probably one of the biggest questions, along with nick clegg. We thought he was the king maker. Perhaps hes reconsidering the Strategic Direction of his career. Guy manus cranny, thank you very much indeed. Lets get of you from one of the partys most prominent business backers. We are joined by john mills. A man interested in the referendum. Good morning to you, john. Walk us through the night. What happened to the labour party . John i think the labour party went into the election fairly confident that there was going to be a good result. As soon as the exit poll came out, the atmosphere changed. I think the exit poll turned out to be more and more accurate at the night progressed. Labor reconciled itself to the fact that it was a bad night. Guy why . John i think it is hard to tell. It must be the cause a huge number of people made up their minds at the last minute. You normally expect some reversion back to the incumbent government and maybe some small swing to the right as people worry about financial affairs. But on the scale that this happened last night, i think it was impossible to predict. Guy should ed miliband resign . John i think the labour party has to reassess the situation as a result of what we saw last night. I think ed miliband had a great achievement in holding the labour party together. I think he cant be blamed for what went wrong. Guy you dont think it was a personal thing . John maybe there was an element of that, but i think he grew in stature during the election. I think the press was very unfair to him for months running up to the election. When people saw him on various debates, i think they warmed to him. I dont think ed miliband can be blamed personally for what went wrong, but labour party had a bad result. Guy would you have any candidate you would have thought would be a better replacement . John i dont have a view on that. I think the labour party has to reassess where it is going. I think a leader will emerge on the basis of the debate that has to take place. Guy was a big error in judgment not recognizing the significant shift taking place in scotland . John i think there was. The lobby that overtook the labour party in scotland really overtook all the political parties. Labor, libdems only one seat in the whole of scotland. It was all the parties. Guy is the political system in the u. K. Broken . You look at how many seats were taken buses versus the number of people that voted. Do we need to rethink how we vote in this country . John maybe we do. The problem is, the system has always been a very unfair system , but the advantage is that it does produce governments. This time, it appears to have done just exactly that. We had a result which has produced one party with a majority in parliament. I think that reform of the electoral system is dangerous. It is paved with good intentions, which arent necessarily going to result in what everybody feels is a more effective system. Guy im curious that you talk about the fact that a majority government is maybe a good thing. The coalition in some ways did good things for u. K. Business. U. K. Plc has done well under a coalition government. Theres this assumption that a majority is a good thing. Are we doing ourselves a disservice in the u. K. By thinking that . John i think that is a very open question. Most in this country do seem to want a system which produces guy have politics move so significantly since then . John that may be right. The next few years are going to be taken up by discussion of how these things will be done in the future. I think we are in very turbulent times. Guy in some ways, this was a disappointing night for you, but in some ways it wasnt. A referendum, our relationship with the eu, maybe needs to be reconsidered. John ive always thought we needed a referendum. Wherever we are going, we need some democratic endorsement. We need to make up our minds whether we make a go of it or whether we go our separate ways. Also, the british people really do want to have a say on this very important issue. All the polling that weve done suggests that theres a substantial majority of people, including people who want to stay in the European Union, who want to have a vote. Guy should we do it sooner rather than later . David cameron has talked about this happening in 2017. Would argue that we need to have that sooner . John i dont think i would. I think the vast majority of people in this country and that includes businesspeople, would like to see changes in our relationship with the European Union but they would like to stay in. If these changes are going to be made successfully, it is going to take time. Two years was a reasonable time span. I think the timing looks right. Guy thank you very much indeed. John mills, the founder of jml. Let me show you how the markets are trading in the United Kingdom. We are seeing a pop in the ftse 100. Cable is trading higher. We got nonfarm payrolls coming up later. Pound versus the dollar is up by 1. 36 . Yields are falling when it comes to u. K. Bonds. The referendum now front and center for these market. We will take a break. Guy welcome back to Bloomberg Politics live in london. Let me take you back to downing street. Let me take you back to Ryan Chilcote. George osborne expected to make an appearance shortly. Ryan thats exactly right. The press, which was rather boisterous, has quieted down. George osborne is the leader of the campaign and the conservative party is now just a handful of seats away from claiming outright majority in the house of commons, which would be an extraordinary success. It is being forecast and predicted by several different entities right now. Well mr. Osborne, who is the chancellor of the exchequer, speak here . You never know, but it would be unlikely or perhaps surprising for him to speak head of the Prime Minister, David Cameron. David cameron is inside 10 downing street right now. Before he heads to Buckingham Palace around lunchtime to meet the queen thats when he will formally kickoff the process of forming a new government which we are expecting could very well be a majority government. In other words, not a coalition, not a minority government where they have to get on an ad hoc basis. George osborne expected to come out of 10 osborne 10 downing here any moment now. As the conservative party really shifts gears from being careful not to get too triumphant as they were earlier in the day. Back to you. Guy ryan, thank you very much indeed. We will see you in a moment. Gs European Headquarters in london. Im guy johnson. So coming up in this hour, stock surges as David Camerons conservative party led the elections. The pound is also jumping against the euro and against the dollar. Gilts also leaping with yields falling sharply. The conservative leader David Cameron back at number 10 while the labour party takes a beating, the most high profile loss, the shadow chanceler. Chancellor. Ed miliband will remain shortly. A big night. A big morning. Lets find out the latest. Jonathan ferro standing by. Jonathan thanks, guy johnson. The conservative party inches away from a majority. You can see the action straightaway straight away on the bloomberg terminal. The pound stays higher throughout the night and morning. Not just against the dollar bhutch stronger against the euro. Having its best day against the euro since 2009. They have had very separate stories. The pound and the fx market telling a story about uncertainty and certainty this time around. You see the volatility dropping off as well. That is the fx market. Lets go to the equity market. Longterm chart here. Going all the way back to 1986. That right there, guy johnson, an alltime high on the ftse 250. The equity market tells you something about policy. Look at some of these movers. I look for the banks. No increases bank labour. No taxes to go through. Lloyds bank up. Foxtons a onetwo punch. That stock up 9 . Centrica up 6. 37 pnket . The gilt market. This is the interesting one for he. What does the bank of england do . If we get a conservative majority, fiscal policy. Will it be that much tighter . That was the talk coming into this election. The yield off. Down by six basis points. For me the fixed income market is where the story is going to be in the months to come. Guy we are going to go back and forth on it all morning. Were going to get the result on monday so it doesnt get confused with the election outcome. Get the inflation report. Mark carney will be asking questions. Maybe well get a little bit of certainty then. Maybe. Maybe he has recovered from his marathon running. Interesting to see how many jokes are made about that. Lets talk about how the politics is continuing to play out. We still dont have final certainty but manus cranny is going to bring us all the details. Manus there are 19 seats left to report. The polls say 390. Look at that. Dominance. I want to take you to wales. Some of the most hotly contested seats rst in wales. They fell to the tories in small margin but they fell nonetheless. You a wibeout of labor and liberal democrats and the numbers as they stand, 315 to the conservative party as cameron seeks to reestablish himself as the center of labour. The big shock sosk the liberal democrats dropping to to eight and the s. N. P. Coming in with 56. The complex is about to change. Ed boles, the shadow chancellor will go. Ed miliband thought he could potentially wake up today as Prime Minister. Who might challenge him . Next up in terms of the challenge is going to be in the liberal democrats. Will nick clegg stay . He has eight seats in total. Going back to the math guy, what we have got is a big changeup here in scotland. Danny alexander who is in there in scotland. He was at the treasury. A very well liked person. That seat is gone. That name is gone. It is an absolute whitewash here in scotland. Election 205. Back to you. Guy thank you very much for that indeed. Make sure you log in to bloomberg. Com for that interactive minute by minute results as we work our way through final counts as we work our way towards what is now predicted to be a conservative majority. The fascinating story really here is in the seats and the numbers that have gone to the individual parties. The number of people that have voted. How different this election would have been in terms of it being run under a proportional representation system. Amazing start. So much ground for debate here now. Lets turn our attention towards westminster. We have got George Osborne arriving at downing street. There you go. The the chancellor. Look at that smile on the chancellors face. Some would call him the architect of this story. The election story being fought out very much in the economic trenches. Ryan chilcote is at downing streets watching the chancellor arrive. A big smile on mr. Osbornes face. Ryan yeah, a huge smile. Wheard from him earlier in the day. He said he always thought that they could win a majority in the parliament but he did say he would be lying if he really, really thought if he was banking on it. So you see him entering his drens at 12 downing. He has just gone into the building with with a big, big smile. Some here in the press were obviouslying for him to spreek as the head of the conservative campaign but since the Prime Minister hasnt spoken just yet, most of us thought that was unlikely. Wouldnt be very politically correct now, would it . The Prime Minister himself has been here for the last few heroes. He is going to go to Buckingham Palace. We understand sometime around lunch or 12 30 he is going to meet the queen. She is going to make her way to Buckingham Palace. That is when the Prime Minister kicks off the process of forming the new government which could be a majority government. Naturally here at downing street, the conservative partys headquarters they are just delighted for the results. Some will tell you they saw this coming but i think the vast majority are hugely surprised that they got way more votes than they thought they were going to get and way more votes than they got this 2010 and this is the first time we had an incumbent government go into an election and come out with a stronger mandate than they did going into it in more than three decades. George osborne just delighted, isnt he, with their performance last night. Guy . Guy Ryan Chilcote joining us from downing streets. The first budget a different experience for George Osborne. Across the house, the shadow chancellor losing his seats within the last couple of hours. Lets get further down the road from 10 downing street over towards the house. Anna edwards is there for us. Such a different makeup. So many more scottish accents in the house this time around and so Many Political heavyweights are going to be absent. Ian yeah. Good to see guy. More than 50. That perhaps is group that is smiling. Smiles at downing street. At least not from ed miliband, of course he won his seat but when accepting or making his speech earlier on today he did acknowledge that it was a very disappointing night for the labor party. As things stand at the moment, they have won 92 seats fewer than the tories which is staggering when you consider going into this election people were talking about things being too close to call. We said it many times, they dont show the same things. That clearly has been a quite a shock. The toirs gaining 21 seats tories gaining 21. There have been some other high profile names in the labour camp. Jim murphy, alexander as well losing to a 20yearold. These are guys that have been doing their job for a very long time for scottish labour. They had a tough job to fight off the charge from what has been a tough campaign. Guy thank you very much indeed. My colleague, anna edwards. Coming up, well get an investors view. Well be getting a soverpbes what this man will do next for British Business and the Investment Climate in this country. Significantly different political story now emerging. Let me show you the map. It really is quite incredible as we watch the final votes continuing to be counted. The final seats to declare, but as you can see, a blue map south of a yellow map north of the wall. How will this new Political Landscape affect policy moving forward from here . That is the big story. That British Business now has to think about. Well talk about it when we come back after this break. Well see you in a moment. Guy welcome back. Youre watching Bloomberg Politics. Were live from london on bloomberg television. I want to bring you some of the top stories outside the u. K. Political events that we have seen. Syngent has jebted a takeover from monsanto. Payroll data due later. That follows an increase of 126 in march. The smallest rise in more than a year. Watch the revision lines. They are going to be quite interesting today. The chief executive of lafarge said he is very confident the shareholders will approve the 46 billion deal this morning. Cameron is blackrocks international chief investment strategist. I guess the first question is a simple one. Initial reaction . Everybody was taking the view dictated by the polls. The polls have been similarly wrong. Sterling has jumped within the u. K. Mark. Utilities which have been underperforming have big jumps and so do financials and the gilt markets have not done a thing. I think it is really it has strengthened a bit but has given it back. If memory serves me right it is the traditional patent the day after the election mark up, mark down. Guy lets talk about going back to fundamentals. The initial reaction maybe needs to be tempered. Were going to hear about it a lot in the next 24 hours. A referendum on the e. U. Membership. This united in the sense the scotsish question is clearly here to stay. It might be posed in a different way than sturgeon proposed to pose it 24 hours ago. A referendum appears on the medium Term Investment horizon. Guy we run a significant current account deficit. Why is that . Is that going to suffer . Is that going to worse as they start to price in that risk . It is a tricky equation. The sum of it has risen because were victim s of q. E. The u. K. Is like a hedge fund. It has borrowed a lot of money. Knew the yields offshore have declined materially were not getting that income flow. I think that this election outcome certainly does not harm the productivity of financial ssts in the u. K. Services in the u. K. But that doesnt mean the current deficit goes away. It doesnt mean our polling record improves necessarily immediately. It is a step in the right direction. But not necessarily a guarantee. Guy when you think about the rest of europe as well, when i think about that referendum do, i need to price a discount into europe . This is a one sided story. It is a conversation that needs to be had on the other side of the channel as well. Indeed. What David Cameron is committed to is to bringing a referendum on the interpret turnovers u. K. s engagement with europe before 202017. In that, there is the proposition. He outlines his strategy in the speech he gave at bloomberg last year. There is a lot renegotiations including treaty change. Treaty change issues such as immigration, people have got two sides to them. We have seen Jeanclaude Juncker and other leaders basically saying no hope. I think there is a lots of water to flow under the bridge before get to that referendum. Thats why i also say it is beyond the immediate investment. It is a real issue for business to think about as they go forward to monitor. Potentially in the longterm, have some impact on commercial real estate demand as well. Guy how significantly different is the Investment Case this morning for the u. K. Than it was yesterday morning . You to say without wearing any Party Political hat that it is better in the sense that it is more certain. Then you could go to the point and saying well continuity is something markets like. You could say certain highly weighted sectors in the u. K. Market have a slightly better outcome in front of them burr i think the u. K. Makt is about trend and whats happening. Oil prices whats happening, hem care, about whats happening. 70 of the ftse sales outside the u. K. Biggest pop has been in mid caps. Much more domesticically or yen tated than the 100. Guy you and cameron ewan Cameron Watts staying with us. Were going to go to glask and get a business glasgows chamber of commerce when we come back. Guy welcome back. Youre watching Bloomberg Politics live on bloomberg. Here is a look at some of the nights biggest losers on a night full of surprises. Is duly elected as a member of parliament. It has been an honor to serve the people and the communities of this constituency. That honor i wish him well. Douglas garvin alexander, scottish labour party. 17,864. Mary black. Scottish national party. 23000. The timeless champion of the underdog now finds itself in the position of being the underdog. Any personal and disappointment i have at this result is nothing compared to the sense of sorrow i have at the results that labour achieved across the United Kingdom tonight in scotland and also in england and in wales. Guy some amazing shifts in the Political Landscape in the makeup of the house as a result of what happened last night and the way that the british people voted. Some serious heavyweights losing their seats. A very different house will reemerge when it reconvenes. Interesting how that story is going to change as a result of it. Lets get back to ewan Cameron Watts, chief investment strategist at blackrock. Does the complexion change . The house has changed significantly the story has emerge as a disunited u. K. In many respects. Just in termses of the u. K. Standing on the world stage, did last night do it any damage, do you think . I think probably somewhere around zero. The declining prestige of a country that is finding it difficult to meet its condominiums in terms of defense spending and g. D. P. Clearly the separatist movement scotland. These have issues im finding coming out more and more in conversations with international investors. They look at the u. K. And think it is a very stable country and it is. One of the things that will happen because well have more fiscal austerity is the u. K. Will recover its triplea credit rating. I would think that will come in the next year or so that we will get back to a triplea rating. Pretty much every measure, u. K. Is a very strong competitor internationally in the financial markets. So i think that is where the issue arises really will be. Are we losing credibility because of this disunited nature of our union . If we go to a federal structure, that is a whole different bunch of bananas. Guy in 30 seconds, they are meeting down the road as we speak. What is the initiative . Have a cup of coffee. Dont go anything. I think people will be looking at the employment component closely because over the lossor productivity. Guy it was a pleasure. Nice to see you this morning. Join me on twitter. The conversation obviously raging surrounding what happened over the last 24 hours. Youll find me at guyjohnsontv. Still on the program wheerding to scotland and talk about the s p surge and what that means. Well tell you in a moment. Hnson. The u. K. Election clearly dominating our Coverage Today but let me take a look through some of bloombergs other top stories. Syngenta has rejected a takeover from its u. S. Rival monsanto. They said the offer undervalued the company and that a merger could have significant execution risks. The investors agreed to pay 2. 8 billion pounds to merge the u. K. Wireless business. More evidence overnight that chinas economic slowdown, exports declined in april and imports slumped. That is fourth straight double digit decline. I want to show you whats happening the market house in the u. K. The ftse 100, higher this morning no surprise there. Still up by 1. 76 . Just north of the 7,000 mark. What were seeing out of 100, i think we got 99 stocks higher today. 99 out of 100. The 100th . Pearson. The only stock showing red this morning. The ftse being eclipsed by the 250 which has a much larger domestic component. One of the big stories overnight is what has been happening that has been obviously the seat that is being contested by nigel farage. It was a huge dwrournt. Plus 70 . There is a lot to the right of the screen, left of the screen, nigel is standing next to him. The comedian that is standing there. Were waiting to see exactly what the outcome of this result is going to be. Lets listen in. To the returning officer. Nigel we are the reality party. 126. [applause] ruth angela bailey. Airport independent party. 191. [applause] Robert George sorry, we have got the wrong one there. Graham george burchell. Party for united thanet 63. [applause] Robert George bollar. 30. [applause] ian driver, the green party, 1,076. Nigel paul farage. 16,026. [applause] Craig Mckinley. The conservative party candidate. 18888. [applause] independent, 61. [applause] Alastair James murray, commonly known as al murray. 318. [applause] William Thomas commonly known as will scoby. Labour party. 11,740. Russell james timson. Liberal democrat. 932. [applause] a total of 163. The percentage turnout was 69. 85. I do therefore declare that Craig Mckinley is duly elected as a member of parliament to south thanet constituency. [applause] well, ladies and gentlemen, i would like to start by thanking my wife for her constant support and also my parents, who have always been there in the background supporting but i think we ought to all think my predecessor who has been a source of strength for me and she served our community for years with great dedication. [applause] i would like to thank my Campaign Team and the many volunteers from nearby and further afield who have given their time. I would like to thank the police and returning officer and all of the staff for the efficiency of the election here in south thanet. But of course the people i would most like to thank are the voters of south thanet for trusting me and little bitting me as their member of parliament. Since i was selected as the conservative candidate for south thanet, i campaigned on local and national issues. I have an optimistic and positive vision for our community. And as your m. P. I want to continue in precisely that vein. I will work with Thanet District Council and with roger gale to get the airport reopened as a working airport. I will work with local businesses and Central Government government to get my plan to get rams gate up and running. I will work to sort out the traffic problems in sandwich and ill always defend the vitally important sferses that we have at the qeqm. When it comes to national issues, it is very clear that the people of south thanet votesed to stick to the plan it is a delivering a well working economy. It is only with a Strong Economy that we can have a strong n. H. S. , better schools and help the families and child care. This is what the people of south thanet have voted for and that is what this conservative government will carry on delivering. The election here has been far from a typical constituency campaign. It was here that the ground was supposed to shake as we were struck by a political earthquake with nigel standing at its epicenter. For the people of south thanet have made this country has not experienced an earthquake nor even a minor tremor they ever decided they dont just want an m. P. Wholl protest angrily from the sidelines but they want an m. P. And a government that will get things done for them. The message from south thanet to the rest of the country is loud and clear. The conservative party is working for people. We have a plan that is delivering an economic recovery. Were rewarding work and helping people on the lowest incomes. We have a positive vision for the future of our country. Were not just protesting, but getting things done. And because of all these things, just as i realized sometime ago in my own political journey people here have shown that there is no need for nigel farage and there is no need for thank you very much. The voters of south thanat. Thanet. The definition of whether youre having a good day or a bad day and many of you may think im having a bad day but let me tell you five years ago on election day i was in intensive care after an airplane crash so compared to that, this feels pretty damn good. I do cratchit congratulate the Prime Minister. He has secured a tory majority. Something that nobody thought was possible. And there was an earthquake in this election. It happened north of the border. It happened in scotland. I think you saw lot of vortsde so scared of that labour that they shifted toward the conserve tifftives. Conservatives. I saw another shift in this election. I saw the party the party for people under 30. Particularly young working women. There is a big change going on in politics. And i think what is really interesting, i think what is really interesting, we have always believed that britain needs to get back its democracy. We shouldnt be governed from brussels. What is interesting is whats happening with our democracy in this country. We have a policy in britain that got party in britain who got 51 of the votes in one of the regions and nearly 100 of the seats. We have another party that finished up with one seat in parliament. I think the time has come for real genuine radical political reform. I think you will be the party that leads it. On a professional level, i express tods that degree disappointment. On a personal level. I feel an enormous weight has been lifted from my shoulders. Ive never felt happier. Thank you. [applause] guy ok. Well leave south thanet and return to the studio and talk to Stephanie Baker of bloomberg markets. He didnt resign but he dizzlood lose. He said he will step down if he loses. He said if he loses, he is toast. So he doesnt follow up on that promise, i think a lot of questions will be asked. I think he has tried to dress this up as a victory that ukip got almost 4 million votes and the electoral system is unfair because it only got one seat. He threw a lot at his bid to win in south thanet. It was his seventh attempt to enter the house of commons and he has failed yet again. I think there is going to be some soul searches in ukip and i think people will be wondering whether we have seen its peak. Guy to point about how the electoral system works, though, does he have a point . He must be looking north of the border. Hang on. We have all of these people voting for us. They get all the seats. It is a question that wont go away. I dont see the conservative government contemplating reforming the electoral system given how much they risk losing if they move to any kind of proportional type of system. I find that David Cameron has big things facing him when gets back to business. Scotland, how do you tame the scottish lion that roars and the e. U. Referendum. Will have nigel farage, even if he is not leader of ukip banging the drums on the e. U. Guy one of the stories for the last parliament was tory switching to ukip. You to wonder whether that quest has been removed. You can see what happens. It could have a big impact on your career. From David Camerons perspective, this is great news. It is a great the day couldnt get better for cameron to have farage lose. It was a something they worried about. Even if they won farage would be there gnawing away and stirring up trouble. I think definitely David Cameron is going to have problems with the euro skeptic wing of his party. Guy thank you very much indeed. Stephanie baker joining us. Let me take you to glasgow now and tom mckenzie. Tom . Yeah, were seeing here the Seismic Shift caused by the s. N. P. Youre pitting the scottish voter, the antiausterity vote from scotland against what we see to be the continued austerity vote for cameron and osborne. What does that mean for the Business Climate here in scotland . Joining me now is the chief executive of the tabasco chamber of commerce. Stewart, what can we read from the results . What does it mean for business . I suspect in scotland the reaction will be not dissimilar to the reaction against the u. K. A complicated outcome. What sorts of policies are going to be implemented for sectors like infrastructure or energy that depend on how investment is going to enbe encourage bid the government. There will be some relief for a chance of clarity. Wholl be governing the country. Is there concern the almost total grip that the s. N. P. Has on scottish politics . I guess there is a couple of things i would say about that. Firstly, they are probably used to the idea this was coming the polls were fairly clear there was going to be a shift and the referendum had seen its coming. I guess it opened up a couple if one door is closed another couple are opened. Were going to have a european referendum. That is going to be terribly welcome in the Business Community of scotland. Scotland has been dependent on the relationship with europe. Equally, i think it opens up ok, what does happen with the independent referendum. We were told clearly not an issue of this election by the first minister but we have a set of scottish elections coming in 2016 and well wait to see how is that going to play out in this manifest. What are your members expecting from the s. N. P. Member who is make their way to westminster . Looking for their particular tangibles that they want to achieve . I think the most important thing it will be one thing to runs from that 56, a group of 56 is how they handle the further negotiations. At the moment, our understanding is it will be implemented and we have heard one or two senior conservative plillingses making that clear politicians making that clear. We have many of the s. N. P. Saying they want more. We have had debates about what fiscal autonomy might look like. Well be want to see how quickly and fully that issue about fiscal authority. Is that something most of your members would think would be beneficial to them . One or two very enthusiastic. Scot land has control over its fiscal affairs. Others are concerned about the general drift of the Scottish Government that might lead to much higher taxing, less public spending and higher borrowing. The question of the second referendum is high up in peoples minds now. Almost. It has been higher all the way through the process. I know they have been trying to dismiss that as an issue in this election. Were seeing market relief in london as a result. That doesnt come as a surprise to you. Will people take some sense of securities and optimism from that here in scotland as well . Were still going to be exporting whiskey today just as yesterday. People will still be coming to scotland to play golf today as they did yesterday. I dont think the dramatic change is having an impact on daytoday trading. Scots land remains a successful trading nation. It is a very wealthy country and it is going to be a were velty country for the year ahead. Stewart patrick. Thank you. Giving us instand to whats happening with businesses. Guy, back to you in the studio. Guy thank you. David cameron spoke earlier to his team at the tory party headquarters. To be with you guys and say thank you. You are amazing people. I remember casting a vote in 87 and that was that was an amazing victory. In 2010, achieving that dream of getting labour out and getting the tories back in and that was amazing but i think this is the sweetest victory of them all. Guy pretty happy man. Lets find out how to Manufacturing Sector in the u. K. Feels. Is it happy . Were joined by the e. E. S. C. E. O. This is good news. Were going to get some continuity. Absolutely astonishing. Concentrating the for the minute, we can reasonably expect continue knewity here. In terms of growth so critical to the economy. All of that well known. We can look forward to that continuity. However there are some measurable challenges here. One of the greatest uncertainties of course we will now have an e. U. Referendum. It is rumored and likely and why not . The conservative point of view is that will take place earlier than we have anticipated and that of course is an uncertainty and a significant uncertainty for British Business. Guy do you think there will be less money to invest in Engineering Projects . That is a good question. As we stand in in the runup to this election, there was no measurable evidence rble case that were seeing. Now that we know a referendum will take place, the question has to be asked will that uncertainty limit that investment coming in . Certainly in the runup to date, we have no evidence that was taking place. Nonetheless it is a measurable uncertainty. British Manufacturing Industry is that we stay in. Guy beginning the last parliament we saw George Osborne significantly cut back on infrastructure spending. He quickly reversed that as he realized the impact it was having in the economy. Do you worry well see a little bit too much pruning and cutting back . How do you think it will be managed . How do you think it will affect your members . This is a huge, huge issue. What the chancellor is saying is that he will manage austerity in a pretty austere way. He will be cuts here. 45 billion over the next three years out of public spending. And of course that comes from non departments. This is a great cut. Guy do your members believe it . Let me respond to that by saying we as an organization and i personally support austerity. I support getting rid of this massive budget overspend. But you know is it that important if we do it over a threeyear period or a fouryear period or a fiveyear period . Let us not commit ourselves to the absolute definition. The direction of travel that we wut it but not spoil the levers of growth by limbing it to one specific date at a specific point in time. Guy talking to the direction of travel would you now hope for Big Decisions to be made heathrow, all of these kind s of big infrastructure spend issues that have not been decided in the last parliament and many would like it decided sooner rather than later. Would that be the hope now . Do you anticipate that will happen . Now that this election is over, we as a nation are going to stop dithering. Guy do you think . Woulden it be nice . Right. We look at a number of massive product s that arelimited to growth. We must surely have a decision fwrecks in the airport expansion. These recommendations will come through from lord davis, i hope early inner this summer. We can reasonably expect and demand of this government that the decision is taken for example on that critical expansion of the airport capacity. Then of course i look at h. S. 3 which we are now. I look at the strategic road work which is underfunded to the tune of 10 billion pounds. Let us hold this new government and cratchit them. Guy the biggest issues that your members now face out of this governments control . The strength of sterling and the price of oil. They see are big macro factors. That is that is absolutely the case. Were looking to grow our economy and g. D. P. Looking to rebalance that g. D. P. In favor of the Manufacturing Industrial sector. Now given some of those Macro Economic global factors, let us do our best to reclaim our information to the world. Let us outstrip them in terms of productivity, winning market share and of course ins of north america and the far east in that difficult situation, let us be competitive and do the very best we can. Guy nice to see you. Thank you very much for your time. Now thats it for this hour. For our european viewers stay tuned. Were going to be speaking to coast. For our u. S. Viewers, were going hand you over the the surveillance team. Were building up to nonfarm payroll. Well take a break. Well see you later on. Ccommodative fed for their new normal . And sir Martin Sorrell on the death of David Lloyd George and tony blairs anglin. Good morning. This is bloomberg surveillance. It is job say, friday, may 8. I am tom, joining the Olivia Sterns and Brendan Greeley with our top headlines. Olivia it is a tory upset that surprises David Cameron who is poised to return as Prime Minister after easily defeating ed miliband. The bbc forecast that conservatives will have a majority of our lament that would allow cameron to ditch his Coalition Partner of the last five years, the liberal democrats under nextick