On Monday, the spokesman of the British Prime Minister has expressed her hopes that the parliament will support her Brexit plan as it is the only plan that could possibly avoid a hard border with Northern Ireland and had conveyed the will of the British people. However, according to Reuters, a former junior minister had said that 80% or more of her own party’s lawmakers are ready to vote against her Brexit proposals, if she continues being persistent on it. In the case this happens, the Prime Miniser would not have the required 320 votes to command the parliament and the opposition Labour Party would be in charge for the fate of the government and the exit process.
The UK is due to leave the European Union on the 29th of March 2019, however there is still no full exit deal and May still hopes that she could push the Chequers deal through on the comments from some Brexiteers that she has been until now ‘too weak with the EU’. As a reminder, the Chequers plan is covering four areas, which are the economic partnership, security partnership, future areas of cooperation (aviation and nuclear power) and the frameworks required for implementing the agreement. The aim is for the UK to leave the single market in order to re-gain control over the UK’s laws, money and borders, however the Prime Minister did acknowledge that the withdrawal will require compromise and pragmatism from both the United Kingdom and the EU. According to The Guardian, the following has been agreed in the plan: harmonization of goods, where the UK will maintain a common rule book for all goods and the parliament will have oversight of such rules and can choose not to continue harmonization; joint jurisdiction of rules or ‘joint institutional framework’ for interpreting the UK and EU agreements to be carried out in each jurisdiction by the respective courts; new customs deal, where the UK would after Brexit set its own tariffs for trade with the rest of the world without causing border disruption.
Any deal, being it the current one or another, must be approved by the British parliament, and both sides hope to have the deal finalized by the end of the year. However, if the British lawmakers reject the terms of departure, at the end of 2018, then it would leave Great Britain most probably without a deal and will delay the Brexit for 3 months due to the Christmas Holidays. Adding more pressure on the Prime Minister, some lawmakers have been progressively arguing for a second referendum, where the people of the United Kingdom would have the final say on any deal with the European Union. However, until now, Theresa May has been firmly rejecting any idea about the second referendum.
In the meantime, even though the situation regarding Brexit is heating up, the macro-economic readings that came out on Monday for the UK have shown the fastest economic growth of the country since August 2017. The UK’s GDP was 0.3%, as opposed to the expected 0.2%, and in the 2nd quarter was 0.6% higher than in the previous 3 months. On the other hand, the investor confidence in the euro zone has seen yet again a decline, where the investor more came with figures worse than expected in September, having the forecast at 13.8 and coming at 12.0 points. Of course the number one cause of such poor results is the growing tension between Europe and the United States, as well as the concerns about Brexit and the recent developments in Italy regarding its budget plans.
ECONOMIC CALENDAR EVENTS FOR SEPTEMBER 11th
AUD NAB Business Confidence
GBP Average Earnings Index 3m/y
GBP Unemployment Rate
EUR German ZEW Economic Sentiment
EUR Employment Change q/q
EUR ZEW Economic Sentiment
CAD Housing Starts
USD JOLTS Job Openings
