Brexit is turning out to be a lot more complicated than anyone thought. Listening to Dominic Raab, the Brexit Secretary, it's easy to understand why.
"I had not quite understood that everything that comes to Britain has to cross the sea" explained the Brexit secretary this week.
"It's a function of the way the UK is a peculiar, geographic entity"
he explained. Lessons from history: RIchard II, Act 2 scene 1 ...
"This royal throne of Kings, this earth of majesty, this other Eden, this demi paradise, this fortress of nature, this blessed plot, this realm, this peculiar geographic entity." Yes the Brexit Secretary has realised Great Britain (not the UK) is an Island ... a sceptred Isle in fact.
"“I hadn’t quite understood the full extent of this", he said on Wednesday ... "but we are particularly reliant on the Dover-Calais crossing. You know that bit where England is closest to France." Well now we know. The White cliffs of Dover offer a Brexit reality shock and a lorry park extending to the M25.
To be fair, Government can be difficult, often offering a steep learning curve. Karen Bradley Northern Ireland Secretary had explained, “I didn’t know that Nationalists and Unionists wouldn’t vote for each other." Well who would have thought? Someone should have explained the complexity of office before taking the job, you have to think, culture and sport may have offered a better option.
David Davies had promised the easiest deal in history. Jo Johnson now suggests "the easiest deal in history is leading to the biggest gaffe since Suez and the greatest crisis since the Second World War."
Yes Jo Johnson, transport secretary, resigned from Government this week. Brothers Johnson are united in abandoning Downing Street. It's a bit like that moment in the disaster movie. All the birds fly in one direction, the animals run from the jungle, something horrible and implausible is about to appear from the shrubbery but you are not sure exactly what that is.
It turns out to be The Prime Minister's Brexit deal. It is 99% agreed ... with husband Phillip at least. A few details still require ironing out. Taking back control appears to refer to Brussels and not to Westminster. We will stay within the customs union until we don't, then there will be a backstop.
Some matters are purely technical, how to you paint a border on the Irish Sea? How do you stop fish swimming across the Channel? A deal is close. It should all be over by Christmas, but which Christmas? The deadline is looming, business cannot afford to wait.
This week, CME Group. said it’s moving its $240 billion-a-day short-term financing market to Amsterdam from London. German ball bearings maker Schaeffler announced the closing of two of its three British plants. Surgical appliances manufacturer Steris said it plans to move its corporate base to Ireland from the U.K.
Panasonic is moving to Amsterdam ...
Brexit is complicated, now they tell us ...
UK Growth up by 1.5% in third quarter ...
Good news for the Chancellor this week. The economy grew by 1.5% year on year in the third quarter following growth of 1.2% and 1.2% in the first and second quarters.
Manufacturing was up by just 1%. Construction output was up by 2%. Service sector expansion was up 1.7% with hot spots in financial services, distribution and leisure. For the year as a whole we expect growth of 1.4%.
In 2019, the EU has suggested growth will be just 1.2%. The OBR forecasts average around 1.5%. The Bank of England has forecast growth of 1.8%. The giveaway budget suggests growth could well be 2% or higher assuming a satisfactory basis for Brexit is achieved. Jobs growth continues as earnings increase, the outlook remains positive for the UK despite the short term nerves.
House prices increased by just 1.6% in October according to Nationwide and 1.5% according to Halifax. Housing market transactions remain relatively low. There were 1.2 million transactions in the 12 months to September 2018,
Car sales fell by 3% in the month and 7% in the year to date according to the SMMT. For the year as a whole, diesel sales were down by 30%, petrol sales were up by 7%. In 2018, registrations are expected to fall by just over 6% to a level of 2.4 million. The short term position remains mixed.
The IMF continues to warn of the damage to world trade of tariffs and the threat of a China - US trade war. We expect trade volumes to slow to less than 4% this year following growth of 4.6% in 2017.
This week the Fed voted to keep rates on hold. Markets expect a rate rise in December with more to follow in 2019. Rising dollar rates will place pressure on emerging markets, exacerbating the challenge of serving debt and accelerating capital outflows.
Grumpy Trump arrives in Europe ...
As expected, the GOP lost control of the house, the Republican hold on the Senate was extended. It was a setback for the President but ...
Trump announced a great victory, fired Jeff Sessions and excluded Jim D'Acosta from the White House Press Corps.
The President talked of working with the Democrats on a bi-partisan basis, assuming there will be no pursuit of impeachment nor difficult "investigations" of course.
A Federal judge blocked construction of the Keystone XL oil pipeline. A disgrace said Trump. A recount was called in Florida, another disgrace said the President. A grumpy Trump traveled to Europe opening up a rift with President Macron on arrival with more to follow no doubt.
It's going to get tough for the President. A siege mentality will grip the White House. Pressure will increase as the President's tariffs disrupt expansion in the USA and the Democrats flex their muscles. Much to follow ... but ...
That's all for this week, have a great week-end, Don't Miss Our Monday Morning Update, we will expand further on market moves ...
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for FREE weekly updates on the UK and World Economy.
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.