Theresa May likely to resign if she fails to win support for Brexit deal

The Prime Minister has proposed a revised Brexit deal, with a number of concessions designed to win cross-party support. However, the response so far suggests this fourth version of the deal is unlikely to pass parliament, likely forcing May to stand down. We think these developments raise the risk of a hard Brexit and we expect UK economic activity to face further headwinds in 2019.

UK inflation ticks higher

UK headline inflation picked up to 2.1% in April, driven by higher energy costs. Although inflation is slightly above target, we expect the MPC to remain on hold until there is more clarity regarding.

Markets focused on activity data as trade tensions escalate

The latest global survey data shows further weakness in economies that depend on manufacturing and exports, such as Germany and Japan. Overall, the near-term economic outlook hinges on trade talks between the US and China. However, recent developments suggest there is little prospect of an imminent agreement.