Economic Review | December 2018
Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future. It is not intended that individual investment decisions should be taken based on this information; we are always ready to discuss your individual requirements. We hope you will find this review to be of interest.
What next in the Brexit saga? With less than three months to the country’s scheduled EU departure, it remains unclear whether the UK will leave with an amicable deal, crash out with no deal or whether the Brexit process will even be completed at all. Following 20 months of arduous negotiations, Theresa May reached agreement with the EU on how the Brexit divorce will work in mid-November. However, while the Prime Minister did secure Cabinet backing for her deal, navigating safe passage of the EU Withdrawal Agreement through parliament is proving to be a much more daunting task. MPs began debating the bill on 5 December. However, after just three of the five planned days of debate had taken place, Theresa May was forced to postpone a Commons vote scheduled for 11 December after it became apparent that she did not command anywhere near enough support from her own MPs to get the bill through. Indeed, the Prime Minister admitted that “widespread and deep concern” surrounding the Northern Ireland backstop meant her deal would have been rejected “by a significant margin” had the vote taken place. Instead of facing heavy defeat she therefore sought to raise MPs’ concerns with EU leaders at a
Brussels summit in the hope of securing fresh concessions. However, Theresa May’s efforts proved fruitless and ended in confrontation with European Commission President JeanClaude Juncker, after he described her Brexit demands as “nebulous and imprecise”. Having secured no further concessions from the EU, it now seems unlikely the Prime Minister will have enough parliamentary support for her deal. A Commons vote on the EU Withdrawal Agreement is now set to take place by 21 January at the latest, although Brexit Minister Robin Walker has suggested it may be sooner. The UK is scheduled to leave the EU on 29 March 2019 and, if the bill is passed, then an orderly Brexit will begin on that date; if not, however, a ‘no deal’ Brexit will occur on the same day. Halting Brexit will require a change in UK law, although this does remain a possibility, particularly following a recent European Court of Justice ruling stating that the UK could unilaterally cancel the Article 50 Brexit process and remain an EU member on its existing terms. In short, with less than three months to Brexit Day, it remains distinctly unclear what sort of Brexit will ensue or, indeed, whether Brexit will be delivered at all. SFFS Economic Review_Dec 18