20 March 2019

Into the Unkown?

So much for having a clearer idea of what the future might bring, as I suggested a couple of weeks ago.


You really couldn’t make it up, such is the confusion surrounding how we might – or might not – leave the European Union. As I write this, the confirmed exit day is just nine days away. A little over a week ago I was travelling through France on my way back to the UK for my son’s wedding. At one establishment in which I stayed, the Swiss owner and her German husband remarked that from their perspective, things in Britain looked a mess.

Certainly, the Speaker of the House of Commons threw a huge spanner into the Brexit works, though this should not have come as quite the surprise it did. Even now Michael Dobbs must be making notes for his next tongue-in-cheek political drama. Not that Brexit is the only game in town. On the global front there is still no conclusion to the Sino/American trade talks. While markets clearly expect a deal to be done between China and the United States, there is no sign yet of the expected Summit to be held between the heads of these two powerful nations.

As for our departure from the European Union, with the date set for us to leave so close, it is inconceivable that any deal can be cobbled together in such a short space of time, so it must be either an untidy exit or a prolonged delay. Perhaps by the time you read this we will know more, but I wouldn’t bet the farm on it. Either way, the uncertainty will persist, though markets seem content to shrug all this aside – perhaps a confirmation of how little our benchmark index reflects the domestic economy.

We can at least look to central banks to provide some guidance for markets. The US Federal Reserve Bank’s Open Markets’ Committee concludes its meeting and pronounces on interest rates. The expectation is for no further rises to be posted this year as concerns over the strength of the global economy persist. It will be interesting to hear what they have to say on the matter, though, and the opportunity exists for their guidance to pull either way in the market.

The Bank of England will also be announcing its interest rate decision and again no change is forecast. Unemployment continues to fall and the growth in job creation was even faster than expected. Our central bank’s Quarterly Bulletin is due to be published imminently. Quite what they can say about our economic prospects, given the situation regarding Brexit, is debatable. Still, it will give market analysts something to get their teeth into. For the rest of us we can only hope that the Brexit saga draws to a close sooner rather than later.


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