Global update: What next for Brexit?

The long-running Brexit saga took a new twist in September as the clock continued to tick towards its Hallowe’en deadline. After being suspended earlier in the month, the UK Parliament was hastily reconvened towards the end of September following a shock ruling by the Supreme Court that Parliament’s prorogation had been unlawful.

  • The ECB launched a fresh programme of stimulus measures
  • The Fed cut US interest rates by 25 basis points
  • Japan faced an increase in consumption tax

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The long-running Brexit saga took a new twist in September as the clock continued to tick towards its Hallowe’en deadline. After being suspended earlier in the month, the UK Parliament was hastily reconvened towards the end of September following a shock ruling by the Supreme Court that Parliament’s prorogation had been unlawful.

“Prime Minister Boris Johnson continued to insist that the UK will quit the EU on schedule”

During the month, political tensions continued to rise, stoking speculation that a General Election is in the offing. Meanwhile, before Parliament was prorogued, the House of Commons passed the “Benn Act”, which requires the Prime Minister either to request an extension to Article 50 or to obtain MP’s asset to a no-deal Brexit by 19 October. Nevertheless, Prime Minister Boris Johnson continued to insist that the UK will quit the EU on schedule on 31 October, whether or not a deal has been agreed. Despite the ongoing uncertainty, the FTSE 100 Index rose by 2.8% over September. 

The US Federal Reserve (Fed) cut its key federal funds rate by 25 basis points during September to a range of 1.75% to 2%, having previously implemented a cut in July. The Fed upgraded its forecast for US economic growth in 2019 from 2.1% to 2.2%. President Donald Trump criticised the central bank and its Chair for not cutting rates quickly enough, tweeting: “Jay Powell and the Federal Reserve Fail Again. No “guts”, no sense, no vision!”. The Dow Jones Industrial Average Index climbed by 1.9% over September as a whole. 

The European Central Bank (ECB) revealed a fresh programme of economic stimulus aimed at supporting the eurozone’s economy. The ECB will start monthly asset purchases of €20 billion per month, beginning from 1 November, to continue for “as long as necessary”. The ECB downgraded its expectations for economic growth in the euro area in 2019 from 1.2% to 1.1%, and in 2020 from 1.4% to 1.2%. The Dax Index rose by 4.1% during September. 

Japan’s second-quarter economic growth proved to be less strong than initially calculated. During September, the country’s economy was reported to have expanded at an annualised rate of 1.3% between April and June, compared with a preliminary estimate of 1.8%. Japan’s population faces an increase in consumption tax from 8% to 10% in October, raising concerns about the outlook for consumer spending. During September, the Nikkei 225 Index increased by 5.1%.


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