UK: BREXIT
Another extension has been granted and the PM is working closely with the Labour leader to agree on a deal, what deal? The PM is to face a non-confidence challenge from the conservative party. Could this pose another challenge? Scotland is pushing ahead for a new independence referendum, again? And above all this, we could have another Brexit referendum!
These are difficult times for the UK economy with clear evidence that since the June 2016 vote, GDP growth has slowed down, productivity has suffered, the pound has depreciated and purchasing power has gone down while investments have declined. (LSE report March 2019)
As a result, for a majority of UK firms, Brexit is a growing source of uncertainty and is affecting their businesses.
The UK economy from January to March 2019:
Growth rose only by 1.4% with 2019 forecasts confirming at +1.2% (was 1.7%). Unemployment remains at 3.9%, its lowest level since 1974/75. Annual Wage growth remains stable at 3.4% a direct link to an unchanged level of inflation. Furthermore, Inflation (CPI) remains at 1.9%.
To summarise, UK growth remains within the middle of the G7 countries, but everything is still impacted by the Brexit negotiations and economic predictions are almost impossible until the market has a better vision. Financial markets including the Sterling will remain volatile.
Money Market fund managers (29/04/2019) GBP weighted average maturity (WAM) is about 47 days (next BoE meeting 2/05/2019) so market is definitely not favouring a rate increase.
Europe:
For the EU zone (19) Inflation is stable at 1.6% in March. Unemployment remains unchanged to 7.8% in February & the Euro zone's PMI is slightly up, to 47.80 in April (was 47.5% in March). February Growth up to 0.2% with 2019 projections now stands at around 1.1% (was 1.7% in December).
Germany barely escaped recession by the end of 2018, but the first quarter of 2019 has seen some surprising improvements with: Growth expected to be up by 0.4% (recent annual forecast was around + 0.5%.). Purchasing manager index (PMI) improved slightly to 44.5% in April from the previous month’s seven year low of 44.1%. March unemployment rates remains strong at 3.2% but inflation in April accelerates to 2.1% up from 1.4% in previous months.
USA:
For the first quarter of 2019: Growth is up to 3.2% mostly driven by stockpiling due to the threat of trade war with China. Unemployment remains unchanged at 3.8%. Wage growth slowed down to 3.2% from 3.4%. Inflation went up slightly, up to 0.4% in March with 12 months March CPI, ending at 1.9% compared to 1.5% in February. Core inflation was down to 1.6% in March from 1.7% in February.
