Chief Economist’s Weekly Brief – And they’re off!

The 2019 General Election is officially underway, with politicians of all colours off in search of votes.  At stake is not only the future of Brexit but of fiscal policy, our response to climate change and more besides.  The UK economy looks pale and weak in contrast to the frenzy of activity amongst would-be-MPs.  Business surveys suggest that output stagnated in October, while the Bank of England downgraded it’s growth forecasts, prompting two Monetary Policy Committee members to vote in favour of an immediate 0.25% rate cut. 

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Chief Economist’s Weekly Brief – Another cut

The US Fed has made the third consecutive cut to its benchmark rate to 1.5 to 1.75%, but signalled that it does not expect a further cut in December. Chairman Jay Powell said that a preliminary US-China trade deal and lower risk of a no-deal Brexit had the potential to increase business confidence. So it’s a pause for now. How long will it last?

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Chief Economist’s Weekly Brief – Crunch time

The UK Government and the European negotiating team have reached a new deal. Despite this the Prime Minister had to send a three-month extension request to the EU. However, there is still a chance that the deal will be passed into law before the 31st of October. With 11 days to go all options (deal, no deal, extension) are still on the table.

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Chief Economist’s Weekly Brief – Brexit breakthrough?

Encouraging discussions between UK PM Johnson and Irish president Varadkar fuelled optimism of a Brexit resolution. However, the thorny issue of the Irish border remains a major stumbling block. Time is running out for a deal at October’s EU summit. Meanwhile, a “partial” US/China trade deal has been agreed but hurdles remain. 

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Chief Economist’s Weekly Brief – The border issue

It has proved difficult to replace the “infamous” Irish border backstop. It is still unclear if the PM has enough time and creativity to secure a deal before the mid-October deadline. After a historical ruling by the WTO the US has announced import tariffs on $7.5 billion of imports from the EU, effective October 18th.

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Chief Economist’s Weekly Brief – Institutions fight back

The UK Supreme Court ruled unanimously that proroguing of the Parliament was unlawful. The Parliamentary session has resumed, but there is little clarity on Brexit’s form, date or on the timing of a general election. In the US the House of Representatives has started an impeachment inquiry. At the UN Climate Summit 66 countries, 93 companies and more than 100 cities announced commitments to reach net-zero emissions by 2050.

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Chief Economist’s Weekly Brief – Oil shock

Attacks on two oil facilities in Saudi Arabia led to a 6% reduction in global oil supply and a 15% oil price spike within days. Saudi Arabian assurances that oil production levels will return to normal within weeks have been greeted sceptically. Meanwhile the Federal Reserve lowered the Fed Funds Rate by 25 basis points following a round of monetary easing by the ECB. Bank of England decided to save its firepower for later.

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Chief Economist’s Weekly Brief – Draghi’s last push

Last week started with the prorogation of the UK Parliament, the legality of which will be decided by the Supreme Court this week. Despite the political storm, it looks like the UK economy managed to stave off a recession. A series of significant new monetary easing measures were announced by the outgoing ECB President Draghi.

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Chief Economist’s Weekly Brief – Clouds are gathering

Over the last week the government’s working majority was reduced from plus 1 to minus 45. There is still no clarity on the Brexit outcome or the timing of a general election. All of this against the backdrop of a global manufacturing slow down – the UK, Germany, the USA and China all have recorded weakness in manufacturing activity. At least, America and China have agreed to resume trade talk in early October.

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Chief Economist’s Weekly Brief – Waiting for the good news

All eyes were on political theatre in Westminster last week. No-deal Brexit looks more likely. And with it some economic disruption – how much is unknown. The global economic outlook is not promising: the US and China are still locked in the trade war and the Eurozone is fighting to stave off a recession.

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