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“Moment of truth”?

 

September 2018

With six months to go until Brexit takes place, the negotiation process stalled in Salzburg as the EU rejected Prime Minister Theresa May’s Chequers plan. European Council President Donald Tusk described the plan as a “positive evolution”, but rejected the proposals for economic co-operation on the grounds that they would prove detrimental to the single market. 

  • Another Brexit summit will take place in mid-October
  • Comcast beat Fox in the battle to acquire Sky
  • The UK high street remained under pressure

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With six months to go until Brexit takes place, the negotiation process stalled in Salzburg as the EU rejected Prime Minister Theresa May’s Chequers plan. European Council President Donald Tusk described the plan as a “positive evolution”, but rejected the proposals for economic co-operation on the grounds that they would prove detrimental to the single market. He believes the “moment of truth” will come at another summit in mid-October; however, the Confederation of British Industry (CBI) warned that “every day lost in rhetoric is lost investment and lost jobs”.

CBI: “Every day lost in rhetoric is lost investment and lost jobs”

The British Chambers of Commerce (BCC) cut its forecast for UK economic growth this year from 1.3% to 1.1% and next year from 1.4% to 1.3%, citing a “weaker outlook for trade and investment”. Exporters are expected to face subdued growth caused by concerns over Brexit: the BCC warned that “Brexit uncertainty continues to weigh heavily on many firms, as most of the practical questions facing trading businesses remain unanswered”, and urged negotiators to deliver “clarity, precision and results at pace”.

Larger companies performed better than their medium-sized counterparts during September: while the FTSE 250 Index fell by 1.8% over the month, the blue-chip FTSE 100 Index rose by 1%. After a protracted battle between US cable company Comcast and media firm Fox to buy broadcaster and FTSE 100 constituent Sky, Comcast won a blind auction with a higher bid of £17.28 per share.

Retail sales volumes rose at a stronger-than-expected rate of 3.3% year on year during August, boosted by robust sales of household goods, which posted a month-on-month increase of 4.5%. Looking ahead, intensifying inflationary pressures, coupled with August’s increase in interest rates, could dampen consumer spending.

Several high-street retailers issued profit warnings during the month, including footwear and clothing retailer Footasylum, menswear company) Moss Bros – which cited the impact of the FIFA World Cup alongside an unusually hot summer – and women’s fashion retailer Bonmarché, which said that footfall had been affected by weaker underlying demand for the UK high street. Nevertheless, retailer Next bucked the trend and upgraded its full-year profit forecast following better-than-expected first-half sales. Nevertheless, the company urged caution, warning that the backdrop for UK retailers remains volatile amid Brexit-related concerns, although it does not believe that a no-deal Brexit will present a “material threat to (its) ongoing operations and profitability”.


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