Another six months …

The new Brexit deadline of 31 October has given UK MPs an additional six months to reach agreement. Prime Minister Theresa May’s Brexit deal has already been rejected by MPs three times, and a variety of votes designed to break the impasse were all defeated in the House of Commons. The extension forces the UK to take part in European Parliamentary elections in May – otherwise, the UK will be forced to quit the EU on 1 June without a deal. 

  • The extension can be terminated early if the UK agrees the Brexit deal
  • UK profit warnings reached their highest level since the global financial crisis
  • The merger between Sainsbury’s and Asda was blocked

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The new Brexit deadline of 31 October has given UK MPs an additional six months to reach agreement. Prime Minister Theresa May’s Brexit deal has already been rejected by MPs three times, and a variety of votes designed to break the impasse were all defeated in the House of Commons. The extension forces the UK to take part in European Parliamentary elections in May – otherwise, the UK will be forced to quit the EU on 1 June without a deal. 

“Negotiations around the Withdrawal Agreement cannot not be reopened”

The European Council (EC) stressed that the negotiations around the Withdrawal Agreement cannot not be reopened, but EC President Donald Tusk said: “(The UK) can still ratify the Withdrawal Agreement, in which case the extension can be terminated”. 

The British Chambers of Commerce (BCC) welcomed the extension, commenting: “For most businesses … (it) will be preferable to deadlines that are repeatedly moved forward at the last minute”, but called on politicians to avoid playing out “a similar late-night drama” in October. The FTSE 100 Index rose by 1.9% over April, while the FTSE 250 Index climbed by 3.7%.

UK company profit warnings rose to their highest number – 89 – since the global financial crisis in the first quarter of 2019, rising at an annualised rate of 22%. According to EY, profit warnings appear to be spreading beyond consumer-related sectors, and restructuring activity is rising as companies run short of cash. The highest number of profit warnings was issued by the beleaguered general retailers sector: retailers issued a total of 12 warnings during the first three months of 2019, and clothing stores were responsible for half of these warnings. Financial services and travel & leisure also issued a relatively high number of warnings. Meanwhile, over the past 12 months, 44% of companies in the technology and hardware & equipment sectors have issued profit warnings, undermined by lower sales of vehicles and electronics, particularly in China. Although the most common reasons given for a profit warning included falling sales, problems with contracts, and rising costs, 10% of warnings specified Brexit as a contributing factor. 

The Competition & Markets Authority (CMA) (blocked) the planned merger between supermarket chains Sainsbury’s and Asda, citing concerns that the deal would lead to higher prices for consumers. Elsewhere in the retailing sector, online fashion retailer ASOS reported an 87% drop in half-year profits during April, having issued a profit warning in December. 


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