Global update: Parliament’s suspension creates controversy

The prospect of a no-deal Brexit crept closer during August as Prime Minister Boris Johnson announced that Parliament would be suspended shortly after MPs return from their summer break until the Queen’s Speech on 14 October. 

  • The UK economy shrank by 0.2% during Q2
  • The renminbi fell to its lowest level against the US dollar for over a decade
  • The US and China announced additional tariffs on imports

To view the series of market updates through August, click here


The prospect of a no-deal Brexit crept closer during August as Prime Minister Boris Johnson announced that Parliament would be suspended shortly after MPs return from their summer break until the Queen’s Speech on 14 October. The controversial decision triggered accusations that the Prime Minister was trying to limit opportunities for MPs to prevent a no-deal Brexit ahead of the deadline on 31 October. The pound slid against the US dollar and the euro as investors faced the increasingly remote likelihood that a deal will be reached before the end of October.

“Relations between the US and China continued to deteriorate”

Elsewhere, the UK economy unexpectedly shrank by 0.2% during the second quarter of 2019, posting its first contraction since 2012. The FTSE 100 Index endured a choppy month, dropping sharply at the start of August and ending the month down by 5%.

Relations between the US and China continued to deteriorate during August as US President Donald Trump ramped up trade tensions between the two countries. President Trump increased tariffs on a further US$300 billion-worth of Chinese imports from 10% to 15%; in response, China announced that it would impose additional levies on US$75 billion-worth of US imports into China. China’s currency weakened against the US dollar to its lowest level in over a decade, prompting President Trump to accuse China of manipulating the renminbi in a bid to alleviate the impact of higher US tariffs on Chinese imports – an accusation denied by China’s authorities. The Dow Jones Industrial Average Index fell by 1.7% during August. 

In Europe, investor sentiment was undermined by disappointing data from Germany. The German economy shrank during the three months to June, contracting on a quarter-by-quarter basis by 0.1%. Growth was dented by a slowdown in export activity. On an annualised basis, Germany’s economy grew by 0.4%, but exports declined by 0.8%, posting their largest drop in the last six years. Over August as a whole, the Dax Index fell by 2%.

Japan’s economy posted its third consecutive quarter of positive growth during the three months to June, expanding at an annualised rate of 1.8%, relieving some of the pressure on the Bank of Japan to introduce further monetary easing measures. Nevertheless, the Nikkei 225 Index fell by 3.8% over the month as nervous investors stoked demand for the yen, leading to concerns over the outlook for Japanese exporters.


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