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The wait is finally over. After months of campaigning, TV debates and a torrent of leaflets, the UK public today go to the polls to decide on the country’s future in the European Union. This Update is intended to help clients keep track of the key …
23rd June 2016
The last few opinion polls released before EU referendum voting closes appear to have largely convinced markets that the UK will vote to remain in the EU. … Brexit Watch: Markets expect voters to reject …
Betting and financial markets continue to consider a vote to remain in the EU by far the more likely outcome in tomorrow’s referendum as we await the remaining few opinion polls. … Brexit Watch: All eyes on final flurry of opinion …
22nd June 2016
Betting markets – which have a good track record of forecasting votes – still appear to consider a vote to remain far more likely than a leave vote, even though opinion polls point to a neck-and-neck race. … Brexit Watch: Polls and bookmakers still at …
21st June 2016
It is generally accepted that a vote to leave the EU in this week’s Referendum would have an adverse impact on financial markets, in particular, a drop in the pound. But any movements will crucially depend on what happens in the next few days, and all …
The CBI Industrial Trends Survey for June showed an improvement in manufacturing activity despite the sector facing subdued external demand and the domestic uncertainty caused by the EU referendum. … CBI Industrial Trends Survey …
Adding to the Chancellor’s concerns about the outcome of the EU referendum on Thursday, the public finances don’t appear to be on track to meet the OBR’s forecasts from the March Budget. … Public Finances …
The main culprit for the UK’s huge current account deficit is the recent deterioration in the UK’s investment income balance. While we expect some of this to be cyclical, we doubt that we will see a return to the strong income surpluses seen in the 2000s. …
20th June 2016
The Leave campaign’s earlier momentum appears to have stalled over the weekend as referendum campaigning resumed on Sunday, improving sentiment in both UK and global markets. … Brexit Watch: Markets bounce as Leave loses poll …
While the main talking point in recent days has been “Leave” taking the lead in EU referendum opinion polls, it appears that markets are still far from fully pricing in a Brexit . This suggests that the short-term market reaction following a vote to …
17th June 2016
Brexit fears have started to take their toll in global – as well as UK – markets in the past week as opinion polls showed support for Leave rising less than a week before the EU referendum. In contrast, the latest retail sales data suggest that consumers …
Consumers appear to have shrugged off EU referendum uncertainty which should help prevent GDP growth from slowing much in Q2. And spending should continue to grow at rates around its historical average. Admittedly, austerity is set to bite in coming …
We have written plenty about the economic effects of both a “remain” and “leave” vote, but in reality it is not that clear-cut. In either scenario, whether the vote is won by a small or large margin will have significantly different implications for …
16th June 2016
The MPC today repeated its warnings about the potential adverse effects on the economy of a Brexit , but reiterated that the policy implications of a Brexit would not be clear-cut. Meanwhile, if the UK votes to stay, we still think that a rate rise …
May’s official retail sales figures suggest that EU referendum uncertainty hasn’t held back spending on the high street and that consumers will prevent GDP growth from slowing too much in Q2. … Retail Sales …
Today’s warnings from the “Remain” camp that the Government would ramp up austerity immediately in a post-Brexit emergency Budget do not look very plausible. It is more likely that the Government would support the economy by loosening fiscal policy. … …
15th June 2016
The healthy performance of the labour market provides more evidence that growth has not slowed markedly in Q2 ahead of the looming referendum. … Labour Market Data …
May’s inflation figures showed that price pressures in the economy remain subdued. However, inflation should still gather more pace next year, regardless of which way the EU referendum vote goes next week. … Consumer Prices & Producer Prices …
14th June 2016
Brexit concerns have intensified over the past week, with polls very close, and this was clearly reflected in falling interest rate expectations (and consequently sterling). But despite 10-year gilt yields hitting an all-time low, there’s actually …
10th June 2016
Last week’s fall in gilt yields to a record low probably has more to do with global concerns than a rise in the probability of a Brexit . Once the turmoil surrounding the immediate aftermath of the EU referendum has subsided, we expect gilt yields to …
A key uncertainty following the EU referendum on 23rd June will be the impact of the vote on domestic political factors. If the UK votes to leave, the political situation will have a key bearing on the direction of the UK’s negotiations with the EU. But …
It’s assumed that a rise in inflation this year is “baked in the cake”, with all economists bar one (out of 33 polled by HM Treasury) forecasting a rise in inflation between now and year-end. But with inflation repeatedly undershooting expectations, …
With even overseas central banks citing the EU referendum as a reason not to raise rates this month, the chances of anything from the Bank of England are nil. If the UK votes to stay in the EU, we don’t think that it will be too long before the MPC …
9th June 2016
Despite the narrowing in the UK’s trade deficit in April, net trade still doesn’t appear to be providing any support to the economy. But the prospects for trade look brighter further ahead. … Trade …
It is by no means guaranteed that the MPC would loosen policy after a Brexit vote. But if it did want to give the economy some extra stimulus, an interest rate cut would not be its only option. … How might the MPC loosen policy after a …
8th June 2016
Despite the upbeat tone of April’s industrial production figures, it is far too soon to proclaim that the sector is out of the woods, or shrugging off Brexit uncertainty. … Industrial Production …
May’s BRC retail sales data were fairly encouraging , following two months of disappointing readings. Overall, there’s relatively little sign that consumer spending is suffering much from uncertainty ahead of the EU referendum. … BRC Retail Sales …
7th June 2016
Recent data have confirmed that the recovery slowed at the start of 2016 and that growth remained precariously unbalanced. Meanwhile, the Markit/CIPS surveys have brought further evidence that intensifying referendum uncertainty has been weighing on …
3rd June 2016
Data released this week confirmed that Brexit uncertainty is negatively affecting businesses – but consumers continue to look considerably less concerned. Although markets have responded to the recent shift in polls towards “leave”, they don’t look as …
While concerns about the overvaluation of UK housing are nothing new, recent signs that the market is cooling has led some to proclaim that we are on the cusp of a house price crash. Although we don’t share this level of pessimism, we do think that …
The improvement in the UK Markit/CIPS services survey in May provides reassurance that the economic recovery has not ground to a halt in Q2. But this is still consistent with an easing in GDP growth to about 0.2% in Q2, down from Q1’s 0.4% rate. … …
With the EU referendum now just three weeks away, we have highlighted below some of the key events which could potentially sway voters and move markets in the build-up to the vote. … Key events to watch in the run-up to the EU …
2nd June 2016
As expected, April’s household borrowing figures provided further evidence that the mortgage market is cooling. By contrast, unsecured lending growth remains high and could prompt additional action from policymakers if it accelerates much further. … …
1st June 2016
The small improvement in the Markit/CIPS manufacturing survey in May did little to change the fundamental picture of a struggling industrial sector. But we remain optimistic that the sector’s prospects will start to look up again later this year. … …
This week the Treasury warned that a vote to leave the EU would result in a recession, while GDPdata added to the evidence that Brexit uncertainty contributed to Q1’s slowdown. But there weremore signs that investors’ Brexit fears are easing, as the …
27th May 2016
Relatively small overshoots in public sector borrowing, like that shown in last week’s figures, could soon pale into insignificance if the UK were to vote to leave the EU next month. Indeed, the Institute for Fiscal Studies (IFS) last week warned that to …
Consumer sentiment seems to be holding up pretty well despite the looming EU referendum. Nonetheless, consumer spending growth in 2016 will probably still be a bit slower than in 2015 as austerity ramps up and the stimulus from earlier falls in energy …
Today’s release confirmed that the recovery slowed at the start of 2016 and that growth remains very unbalanced. However, there appears to be more at play than just Brexit uncertainties. … GDP: Second Estimate & Expenditure Breakdown …
26th May 2016
We don’t think that a vote to leave the EU would have a very significant negative impact on the FTSE 100, although the effect on UK indices of smaller firms might be more pronounced. Further ahead, a weaker pound and rising commodity prices should …
25th May 2016
If the UK votes to stay in the EU, we expect a kneejerk strengthening in financial markets, although any rise in the pound might be short-lived. The economic recovery would quickly get back on track, although any rebound would be limited by the fact …
May’s CBI Distributive Trades Survey indicates that Brexit concerns are still weighing on the retail sector. But the survey has been more pessimistic than the official data recently, so the latest reading may be overstating the extent of any slowdown. …
24th May 2016
The disappointing tone of the latest public borrowing figures ended the recent short run of more upbeat economic data and indicated that the Chancellor has started the fiscal year on the back foot. … Public Finances …
We think the Treasury (HMT) report, published today, suggesting that the UK will go into recession if it leaves the EU goes a bit far. Existing trading relationships will remain in place over the two year negotiating period and a fall in sterling, as …
23rd May 2016
This week saw the campaign to remain in the EU surge ahead in opinion polls, helping to ease investors’ Brexit worries. Meanwhile, strong retail sales data suggest that consumers haven’t been as badly affected by referendum uncertainty as previously …
20th May 2016
Last week broke the recent run of disappointing news and went some way to calming fears that the economy is slowing abruptly. Perhaps most reassuring was the pick-up in retail sales growth, given that the economy has recently been reliant on consumer …
The CBI Industrial Trends Survey for May showed an improvement in manufacturing activity over the past month despite a tough external environment and EU referendum uncertainty. … CBI Industrial Trends Survey …
The consumer recovery appears to have got back on track, at least as far as the official retail sales figures indicate. Indeed, consumer confidence still seems to be holding up well despite the looming EU referendum. And even though nominal earnings …
19th May 2016
April’s official UK retail sales figures painted a more upbeat picture than the recent survey and anecdotal evidence and suggested that high street spending has now come through its recent soft patch. Indeed, consumers appear to be shrugging off any …
Although there were some bright spots in today’s labour market figures , on the whole they offered a further indication that the economic slowdown has sapped the jobs recovery of its recent vigour. … Labour Market Data …
18th May 2016
April’s fall in CPI inflation merely reflects erratic Easter effects unwinding and is unlikely to be the start of a renewed downward trend. But the big picture is that price pressures in the economy are still weak. … Consumer Prices & Producer Prices …
17th May 2016
