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The EU’s decision in the early hours of Thursday morning to grant the UK a second delay to Brexit, this time for six months until 31 October 2019, removes any remaining risk of a no deal Brexit on Friday but probably delays the chances of a decent rebound …
11th April 2019
The initial estimate of GDP was once again stronger than the survey evidence had suggested, providing a reassuring sign that the economy has weathered the Brexit chaos and overseas slowdown well. But if the EU tonight grants a long delay to Brexit, that …
10th April 2019
We are not forecasting a no deal Brexit on Friday. But Brexit has a tendency to bring the unexpected and a no deal is still the default. What’s more, although it may be low risk, it would be high impact. So in this Update we consider what a no deal Brexit …
9th April 2019
With only four full days to go until the UK is due to leave the EU at 11pm on Friday 12th April, this week is potentially crucial. Of course, it’s impossible to know with Brexit whether what looks like a momentous week will turn out to be trivial! But …
8th April 2019
A no deal Brexit still can’t be ruled out next Friday 12th April, but the risk has been significantly reduced by the Prime Minister asking the EU for another delay until 30th June 2019. We suspect the EU will offer a longer extension. That would remove …
5th April 2019
The uncertainty caused by Brexit is helping some parts of the economy and hindering others, but as a whole the economy isn’t doing too badly. An apparent surge in stockbuilding ahead of the original Brexit day of 29th March boosted the Markit/CIPS …
3rd April 2019
With the UK entering the most intense phase of Brexit uncertainty (so far!), the gloomy tone of March’s Markit/CIPS services survey is perhaps not too surprising. While we suspect the survey is overstating the weakness, the risks to our forecast for Q1 …
With Brexit gridlocked, the chances of a general election appear to be rising. Indeed, after the third defeat of her Brexit deal, Theresa May said that “I fear we are reaching the limits of the process in this House”. This Update answers nine questions …
2nd April 2019
The inability of Parliament to reach a consensus on a Brexit outcome in tonight’s second round of indicative votes leaves the economy and the financial markets in limbo and Parliament in one hell of a pickle. After rising throughout the day to $1.31, the …
1st April 2019
Stockbuilding ahead of Brexit undoubtedly flattered the manufacturing PMI in March. Nonetheless, the manufacturing sector should support GDP growth in Q1. And the increase in the employment and new orders balances provide reason to think that some of the …
The original Brexit day (29 th March) is upon us, yet the end point and the consequences for the economy and the financial markets are as unclear as ever. As the dust of this week settles, the four possible outcomes haven’t changed – deal, no deal, no …
29th March 2019
The rejection of May’s Brexit deal by 58 votes means with two weeks and eight hours to go until the UK is due to leave the EU there is still no clear path for Brexit itself, the economy and the financial markets. That’s why the pound fell from $1.30 to …
There are some signs that households are saving more, possibly in response to concerns about Brexit, but consumers aren’t panicking. And a higher saving rate now could lead to a more significant rebound in spending if a Brexit deal is agreed either today, …
Despite the ongoing impasse in Westminster on Brexit, weak GDP growth of 0.2% q/q at the end of last year probably marks a trough. The robust monthly increase in GDP in January and indications that consumer spending growth has picked up since suggest that …
With just two weeks to go until Brexit and uncertainty higher than ever, it is reassuring that the GfK/NOP measure of consumer confidence held steady in March and consumers’ view of both their personal finances and the economic outlook improved a touch. … …
While everyone knows that Brexit explains a big part of the slowdown in GDP growth in recent years, it’s less widely accepted that the global economy needs to take a lot of the blame too. So while Brexit will influence how the economy fares over the next …
28th March 2019
We doubt that the downward pressure on UK gilt yields from the weaker global economy will fade over the next year. In the near term, the 10-year gilt yield may therefore fall below its current two-year low of 1.0%. And if there were a no deal Brexit on …
27th March 2019
The postponement of Brexit removes the risk of the UK leaving the EU without a deal next Friday. But Parliament is still facing the same four Brexit options it always has; deal, no deal, revoke Article 50 or a significant delay to Brexit by an extension …
22nd March 2019
The delay granted by the EU last night has pushed back Brexit by at least two weeks, from 29th March to 12th April, but four options remain on the table – deal, no deal, no Brexit or another delay. So it still makes sense to have different scenarios for …
With just eight days to go until Brexit and uncertainty higher than ever, it is reassuring that households increased their spending on the high street at a decent rate in February. Admittedly, the strength appears to have come at the expense of non-retail …
21st March 2019
How Brexit pans out will dictate the direction and timing of the next move in interest rates, so it was unsurprising that the Monetary Policy Committee kept a low profile today by voting unanimously to keep rates on hold at 0.75%. But if there is a Brexit …
With just eight days to go until Brexit and MPs seemingly losing their heads, it is reassuring that in February households kept calm and carried on spending. The health of the public finances in February also suggests that the Chancellor has the cash to …
The current divergence between weak business investment growth and strong employment growth won’t last as it’s largely due to the uncertainty caused by Brexit. If there’s a no deal Brexit, both will weaken in tandem. If there is a Brexit deal (either …
20th March 2019
With inflation on the up and signs of increasing inflationary pressures in the labour market, we doubt the Monetary Policy Committee (MPC) will sit on its hands for long after tomorrow’s meeting. If there is a Brexit deal or a short delay, we think that …
There was no sign in the labour market data of Brexit concerns at the start of the year as the data beat expectations in every regard. And solid wage growth and employment alongside weak productivity is a recipe for interest rate hikes later this year. … …
19th March 2019
What happens to business investment next depends on Brexit. But in this Update , we estimate how much has been lost, how much will come back and when. The main message is that some boost is in the pipeline. … What next for business …
18th March 2019
Although sterling could continue its ascent this week if PM May can get closer to squeezing her deal through Parliament, our best guess is that the next big leg up in the currency will occur after 29th March. … Next big leg up in sterling most likely …
The Brexit merry-go-round continued this week, with the voting in Parliament providing little clarity on where the UK is headed and prolonging the political uncertainty weighing on the economy. Indeed, the only real decision MPs have taken this week is …
15th March 2019
The length of any delay to Brexit beyond 29th March could have a fairly large bearing on the performance of the economy and the path taken by official interest rates. A delay of 12 months or more could even open the door to interest rate hikes within the …
As the Brexit circus rumbles on the Monetary Policy Committee’s interest rate announcement on Thursday 21st March will not receive the usual attention. After all, the Committee will keep a low profile by keeping interest rates at 0.75%. But depending on …
The decision by Parliament to ask the EU to delay Brexit beyond 29 th March doesn’t completely rule out a no deal, but it does diminish the downside risk to the economy and increases the chances of a more favourable near-term economic outcome. … Vote on …
14th March 2019
The indication by Parliament tonight that it wants to avoid a no deal Brexit will be welcomed by the financial markets as it reduces the chances of the weakest scenario for the economy, although not eliminated them. The pound has risen throughout the day …
13th March 2019
The defeat in Parliament of May’s Brexit deal tonight for a second time increases the downside risks to the economy by prolonging the uncertainty and leaving a no deal a possibility. At least January’s GDP figures released earlier the same day showed the …
12th March 2019
The larger-than-expected monthly increase in GDP of 0.5% in January (consensus 0.2%) is a reassuring sign that, up until January at least, the UK economy was weathering the political crisis at home and slowdown overseas pretty well. … Monthly GDP & Trade …
A series of votes this week might finally see Parliament make a decision on Brexit. Equally, Parliament could vote against all the options, leaving little time for a resolution to be reached before 29th March. … 3 weeks to Brexit: Decision …
11th March 2019
This checklist helps clients keep track of the key official forecasts announced during the Chancellor’s Spring Statement speech at 12.30pm on Wednesday 13th March and to provide some instant context. … UK Spring Statement 2019 …
Next week is likely to be the biggest week for Brexit since the referendum, with crucial Parliamentary votes likely to give us some steer on where the UK is headed. Of course, it is perfectly possible that nothing is decided and there is another step-up …
8th March 2019
There is increasing survey evidence that businesses are stockpiling significant amounts of goods ahead of Brexit, which will probably provide some support to economic growth in Q1. But given that a large proportion of stocks are imported, the net boost to …
7th March 2019
With 23 days to go until the UK leaves the EU and no resolution in sight, we appear to have reached one of the most intense phases of Brexit uncertainty. However, the latest figures have been a bit reassuring. The business activity index of the …
6th March 2019
The headline index of the Markit/CIPS services survey in February suggests that at least some of the concern about Brexit’s impact on the economy has been overdone. However, worries about future demand now appear to be seeping into hiring decisions, which …
5th March 2019
One reason why we think the Monetary Policy Committee will raise interest rates further than most forecasters expect – assuming a Brexit resolution is reached – is decent pay growth. We think it will stay around 3.5% this year whereas the consensus and …
4th March 2019
This week’s political developments mean that the chances of no deal have fallen, which probably justifies the jump in sterling. But the real economy is still suffering from Brexit uncertainty. … Chances of no deal …
1st March 2019
The solid increase in unsecured household borrowing in January suggests that the UK’s scheduled departure from the EU and concerns of a disorderly exit were not causing consumers or lenders to become more cautious. … Household Borrowing Monitor …
The manufacturing sector is starting to succumb to the one-two punch from Brexit and the global economic slowdown. The upshot is that there is little chance that the sector will immediately bounce back from the recent contraction. … Markit/CIPS …
The small rise GfK/NOP’s headline measure of consumer confidence in February leaves it only a touch above January’s five-year low, despite a healthy economic backdrop for consumers. As a result, consumer spending growth will probably remain fairly …
28th February 2019
This Update cuts through the Brexit quagmire by highlighting four things we now know about Brexit, four things we don’t, and four implications for the economy and the financial markets. … The knowns and the unknowns of …
The sharp rise in the pound to $1.32/$ and to a two-year high of €1.16/£ this morning is due to two developments on Brexit that appear to reduce the chances of the UK leaving the EU without a deal on 29th March. … Next suite of Brexit votes …
26th February 2019
The Government has the unenviable choice of deciding whether households or firms should bear the brunt of higher tariffs in a no deal Brexit. It will probably opt to expose some firms to more external competition and consumers to higher prices for certain …
By significantly increasing or decreasing the chances of a no deal Brexit, this week could prove pivotal for the economy and the pound. … Brexit: A pivotal week for the economy and the …
25th February 2019
After a worrying start to the year, the economic news this week has been a little better. This supports our view that while Brexit uncertainty is hampering growth, the economy is fundamentally sound. There has been limited reaction in financial markets to …
22nd February 2019
