Janet Mui: weekly economic update 18 October
The announcement of a Brexit deal – yet to be passed by the UK Parliament – has removed some near-term uncertainty. But the longer-term picture remains unclear.
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- The announcement on Thursday of a deal between the UK and EU caused a sharp rally in sterling.
- This was partly reversed when the DUP declined to support the deal. Getting the deal through Parliament, which meets tomorrow (19 October), looks likely to prove difficult.
- The short-term economic effect of a deal is likely to be positive, as it will remove some uncertainty.
- But a deal would still leave much negotiation to take place. We believe that in the longer-term, Brexit is likely to limit freedom of movement and this could prove a potential brake to future growth.
- In other news this week, China's third quarter growth figures – the lowest since the 1990s – were greeted with disappointment. They are likely to add further pressure to Chinese authorities to increase stimulus measures.
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