Further “robust but constructive” Brexit talk between Prime Minister Theresa May and European Commission President Jean-Claude Juncker yielded no change in February. Jean-Claude Juncker reiterated that “the EU27 will not reopen the Withdrawal Agreement”, but indicated that there might be scope to amend the Political Declaration
- Business sentiment in Germany continued to deteriorate
- The EC downgraded its forecast for economic growth in the region
- Consumer confidence rebounded in France
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Further “robust but constructive” Brexit talks between UK Prime Minister Theresa May and European Commission President Jean-Claude Juncker yielded no change in February. Jean-Claude Juncker reiterated that “the EU27 will not reopen the Withdrawal Agreement”, but indicated that there might be scope to amend the Political Declaration; meanwhile, European Council President Donald Tusk tweeted: “no breakthrough in sight”. Ireland revealed its emergency preparations for a no-deal Brexit, but deputy Prime Minister Simon Coveney warned that no deal would be a “lose, lose, lose” situation for the UK, the EU, and Ireland itself. For now, the Brexit deadline remains 29 March with the clock ticking.
“For now, the Brexit deadline remains 29 March with the clock ticking”
Confidence amongst German companies continued to deteriorate during February, according to the Ifo Institute, which found that optimism had fallen to its lowest level since December 2014. Ifo Institute President Clemens Fuest urged the EU to “do everything it can to avoid a hard Brexit”. He also reminded Europe that, “in the face of trade turmoil … it is one of the last bastions of a rule-based, multilateral international order”, and called on European leaders to complete the banking union. The Dax Index rose by 3.1% during February.
Consumer sentiment rallied in France to reach its highest level since the before the “gilets jaunes” protests began last year. The acceleration of President Macron’s stimulus measures appears to have alleviated concerns about unemployment, although French consumers remain reluctant to commit to big-ticket purchases. The CAC 40 Index rose by 5% over February.
The European Commission (EC) cut its forecast for economic growth in the eurozone from 1.9% to 1.3% in 2019, and from 1.7% to 1.6% in 2020, citing “a high level of uncertainty” relating to trade tensions, China’s economic slowdown, and the possibility of a disorderly Brexit. The EC cut Germany’s economic forecast to 1.1%; in contrast, growth in Poland, Spain and the Netherlands is expected to match or exceed average growth in the region.
The eurozone’s rate of inflation slowed to its lowest level since April 2018 in January as lower oil prices dampened in inflationary pressures. The consumer price index rose at an annualised rate of 1.4%, compared with December’s revised rate of 1.5%. Over 219 as a whole, the EC expects the eurozone’s rate of inflation to moderate to 1.4% this year, picking up to 1.5% next year.
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