UK consumer finally falters EURGBP to rise

27 June, 2017

One year on from Brexit and I was wrong about a recession in the UK by the end of 2016. A little overreaction in my immediate disbelief and disappointment to such a divisive outcome.

It was consumer spending that principally kept that at bay. Now that the consumer has cracked, the pound remains deflated, productivity moribund and wages stagnant, the inevitable has happened. Inflation has spiked and is likely to climb, even with the slowdown in global oil prices. The UK remains a net importer and the debt keeps on keeping on. Exports and the FTSE100 may be at records but that is simply a veneer and correlation to the collapse of the pound.

A minority government, negotiating in the dark with the second biggest trading block in the world, not having negotiated anything for over 40 years is not in a great place. There is the newly empowered Macron/Merkel alliance on one side versus May and her boys on the other. Even with an upset in the September German election Merkel’s opponent is long time Europhile Martin Shultz. The 12 seat majority “Strong and Stable – Brexit means Brexit” UK government is now dependent on a small regional party that, according to the FT this morning, will cost the UK the equivalent of 59 billion pounds.

The level of political uncertainty may (excuse the pun) have cooled a touch but the longevity of minority governments in the UK has a limited and poor history. The GBP may (again?) be off its knees but the outlook remains uncertain. Europe, the EU and foreign policy has been the downfall of many a UK leader from Eden to Thatcher to Major and beyond. As the UK press in unison decries the governments deal to hang on to power and murmurs rise again for May to stand aside for the more conciliatory Hammond as a “Go-Between” PM consumer and business confidence continues to deteriorate.

Today’s six month Financial Stability Report and Mark Carney’s speech will have added emphasis as the BOE juggles the economic pressures amid the political whirlpool.

Source link  
ECB in focus as trade tensions ease

European Commission President Juncker and US President Trump agreed to suspend new tariffs during the negotiations which aim to lower barriers to transatlantic...

Long yields continue to climb

Nikkei gained 1.09% after a strong close on Wall Street and with the earnings season starting to overshadow lingering trade jitters at least for now. A weaker...

Stocks opened lower on trade tension

U.S. trade tariffs tightened market conditions. Coeure said that “while the effects of any tariffs on output and inflation may take time to materialise, falls...

Stock markets mostly moved higher

China and Hong Kong alongside other markets were closed for Lunar New Year holidays, which muted trading, but the Nikkei gained 1.19%...

Dollar traded mostly softer

The U.S. currency has been correlating inversely with global stock market direction of late on the causation that risk-on phases have seen investors...

US durable goods rebounds

U.S. personal income rose 0.3% in November with spending up 0.6%. The 0.4% increase in October income was not revised. The 0.3% spending increase..

FOMC meeting is front and center this week

The FOMC meeting is front and center this week following the solid November jobs report on Friday, which provided the final bit of cover for...

Oil prices are down

Asian stock markets headed south again, as declines and energy and mining stocks led shares lower amid a further drop in metal prices. Concern China’s regulators may limit the flow...

Asian stock markets moved slightly higher

The rout on Chinese bond and stock markets that dominated Thursday’s session faded and the Nikkei managed a 0.12% gain as the yen...


Share it on:   or