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Brexit crunch time

November 2018

Corporate and macroeconomic newsflow faded into the background during November and Brexit took centre stage as the UK and EU finally agreed a Brexit deal. Although the agreement was backed by the Cabinet, it is, however, unclear whether the deal will receive sufficient support from the House of Commons.

  • MPs will vote on the Brexit deal on 11 December
  • The pound was volatile in November
  • UK retailers remained under pressure as they headed into the crucial Christmas trading season


Corporate and macroeconomic newsflow faded into the background during November and Brexit took centre stage as the UK and EU finally agreed a Brexit deal. The withdrawal agreement sets out the terms of the divorce – including the issue of the Irish border – and has been agreed between the UK and the EU. The political declaration has been agreed “in principle” with Europe and covers issues such as trade and security. 

“In the absence of any prospect of a renegotiation, the UK could face political upheaval”

UK MPs will vote on the deal on 11 December. If it receives enough votes, it will go back to the European Parliament for approval. If it passes this hurdle, the UK will quit the EU as planned on 29 March 2019, and the transition process will begin, during which the UK will still be part of the single market and customs union. It is, however, unclear whether the deal will receive sufficient backing in the House of Commons. European Council President Donald Tusk stressed: “If this deal is rejected in the Commons, we are left with … “no deal, or no Brexit at all”. In the absence of any prospect of a renegotiation, the UK could face political upheaval and the possibility of another referendum or a General Election.

The Bank of England (BoE) warned that uncertainties surrounding Brexit had dissuaded some companies from investing, but BoE Governor Mark Carney expects demand to rebound once companies see some clarity. The BoE believes that an “abrupt and disorderly” Brexit would undermine the production capacity of UK businesses that would be affected by delays at borders, disruptions to supply chains, and more rapid and costly shifts in patterns of production”.

The pound had a volatile November, rising as high as US$1.31 against the US dollar, but ending the month below US$1.28. The FTSE 100 Index fell by 2.1% during November, while the FTSE 250 Index dropped by 2.3%. 

UK retailers remained under pressure as they headed into the crucial Christmas trading season. Shops are closing at a rate of around 14 per day and store openings have fallen, according to consulting firm PwC, which cited the rise of online shopping and in-home entertainment as major reasons for the high street’s decline. During November, M&S revealed a drop in food and clothing sales and expects “challenging” trading conditions and “little improvement in sales trajectory” in the near term. 


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