- The Government released its analysis on the potential effects on the UK economy of Brexit yesterday.
- Official figures say that the economy could be up to 3.9% smaller under PM May’s plan compared with staying in the EU.
- In the event of a no-deal the analysis suggests that the economy could be 9.3% smaller after 15 years compared with remaining in the EU.
- The treasury did not put a monetary value on the potential impact but experts have said the 3.9% of GDP would equate to about £100bn a year by 2030.
- The economy will expand under all scenarios but all scenarios are economically inferior to staying in the EU.
- Philip Hammond commented that even though Brexit will cause the UK economy to be worse off, there were political benefits to leaving the EU.
- The Bank of England released analysis last night that warned a no-deal Brexit would cause the economy to shrink by 8%, house prices would fall by a third, sterling would fall to parity with the US dollar and interest rates would soar to combat inflation.
- Bank of England governor Mark Carney warned that a disorderly Brexit could be worse for the UK than the global financial crisis.
- Carney said that he is not trying to scare anyone nor is the analysis part a political play to get support for May’s deal.
- He said the BoE has a responsibility to get the country ready for whatever the outcome of Brexit is.
- He added that a transition period is advisable as Britain is not yet ready.
- Carney came under criticism for yesterday’s comments with leading Brexiteer Jacob Rees-Mogg calling the governor ‘a failed second tier politician’. MP James Duddridge tweeted that Carney has ‘doubled down on Project Hysteria’ and that the timing is ‘highly political’.
- US preliminary GDP q/q came in weaker than expected at 3.5% vs 3.6% yesterday.
- President Trump criticised China’s ‘egregious’ tariffs on US cars ahead of G20.
- Fed’s Powell says interest rates are near neutral.
- Australian private capital expenditure q/q came in weaker than expected at -0.5% vs 1.1%.
- GBP/AUD, GBP/NZD and GBP/JPY are trading at 1.7448, 1.8591 and 144.68.
- We are expecting German preliminary CPI m/m today.
- UK data – net lending to individuals m/m is due at 9.30am.
- We have current account data from Canada and personal spending m/m from the US at 1.30pm.
- There will also be more fall out from yesterdays analysis from the Government and Bank of England.
|Currency Pair||Interbank Rate||% Change on Day|
|Time (GMT)||Region||Data Release||Forecast||Previous|
|09:30||GBP||Net Lending to Individuals m/m||4.5B||4.7B|
|13:30||USD||Core PCE Price Index m/m||0.2%||0.2%|
|13:30||USD||Personal Spending m/m||0.4%||0.4%|
|19:00||USD||FOMC Meeting Minutes|