Michel Barnier has set the deadline. The British government has two weeks to give "vital" clarification on the financial commitments it is prepared to make. There can be no talks on trade before bills have been paid.
The Prime Minister has set the deadline. Britain will leave the EU on the 29th March 2019. There can be no obfuscation. We are leaving at 23:00 hours on the last Friday in the month. Just a few details to be sorted out along the way. Well, quite a few actually. For now, the money is important.
The settlement figure acceptable in Brussels, will be unpalatable on the back benches. David Davis may have a figure in mind. For the moment Davis is loathe to release the "quantum of solace" for the EU. Any amount over £350 million per week will cause turmoil in the Tory ranks. Any amount offered may well be rejected by the Barnier band in any case.
Then of course, the Irish question is of problematic importance. Hard or soft border? Assuming the UK stays inside the free market and the customs union, the border issue will melt away. Theresa May has made it clear, we are leaving the EU, the single market and the customs union. What then is the solution for Ireland? Unification or the creation of a "Free State" akin to Hong Kong or Macau? An interesting debate to follow within the DUP and the thin Conservative majority.
For the moment the question of EU citizenship subject to ECJ regulation has moved to the sidelines. David Davis is looking to a wider audience for solutions. Meanwhile, John Lewis has launched the Christmas ad featuring Moz the monster. No one appears to have realised this is outrageous campaign propaganda to stay within the European Market.
Moz the Monster is clearly the threat of leaving Europe, troubling the child like David Davis, with difficulty sleeping at night. Finally the solution appears in the form of a night light. The darkness of departure can be switched on or off. This week, Lord Kerr delivered the night light. There is nothing inevitable about the Article 50 process, Lord Kerr explains. We can simply change our minds, turn the night light on and stay within the enlightened zone of Europe .... Yep and you thought it was just a TV ad about the "holiday season" ...
Economics news this week ... Trade and Output ...
Looking for a solution? The ONS released the latest data on trade and output this week. Manufacturing output increased by 2.7% in September and by 2.7% in the quarter as a whole. The figures are in line with the preliminary estimate of GDP for the quarter. So no real excitement there. Output remains some 3% below the peak registered in February 2008. It has been a long slow recovery, still to achieve prior peaks of performance.
World trade increased by over 5% in the quarter. Strong performance in China with recovery in the USA and Europe is assisting growth. The UK will benefit from world trade expansion. The uncertainty about Brexit and investment will inhibit growth generally. The problems in the motor trade will inhibit growth specifically. We expect manufacturing output to increase by just over 2% for the year as a whole.
The trade figures for September were also released this week. In the three months to September 2017, the total UK trade (goods and services) deficit widened by £3.0 billion to £9.5 billion. The deficit (trade in goods) was £35.7 billion in the quarter, offset by a service sector surplus of £26.3 billion. The figures were slightly better than expected. For the year as a whole we would now expect a deficit (goods) of £137 billion offset by a £103 billion surplus on services.
And what of the external deficit? In 2016, the current account deficit was almost 7% off GDP. A record for UK data. In 2017, the current account deficit will narrow to around 4.5% of GDP. An improvement of course but a level incompatible with base rates at just 0.5% ...
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The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.