The new month has begun with a couple of surprises. The biggest surprise has been the record jump in the UK manufacturing PMI to 53.3 from 48.3. A much smaller rebound was expected in August after the Brexit shock drop in July.
Britain’s economy after the vote to leave the European Union has been marked by one word: uncertainty. However, the FTSE 100, the UK’s main stock index, seems to be ticking along nicely.
There remains great uncertainty in the aftermath of the UK vote to leave the European Union. Few seem to have a plan for what Brexit will look like and how the UK’s relationship with the outside world will take shape.
Theresa May has come into office talking about people who are “just managing”, but find life tough. Similarly, then Labour Party leader Ed Miliband talked about the squeezed middle in the build-up to last year’s general election.
Reining in big business? Chris Radburn / PA Wire
The most radical proposal for the extension of workplace democracy in a generation has been made not by Labour leader, Jeremy Corbyn, but by Theresa May, the UK’s new prime minister.
Headed for number 11. Dominic Lipinski / PA Wire
Philip Hammond, the UK’s new Chancellor of the Exchequer, has a lot on his plate. He faces a slowing economy urgently in need of stimulus. He confronts tough choices over public spending and will be under pressure to reverse the austerity policies of his predecessor. The question for Hammond is not whether to stimulate the economy, it is when and how.
Sterling is continuing to move lower. It has tested the $1.3050 area in the North American morning, having been under pressure through the Asian session and the European morning. That the UK economy is slowing down, materially, as BOE Governor Carney said, is not really new news. Nor is the fact that the BOE reversed its previous decision to force banks to boost their capital buffers. This was anticipated last week.
Following its vote to leave the European Union (EU), its vote also known as “Brexit,” the United Kingdom (UK) has been searching for ways to attract new businesses. One proposal that has gained traction in the government is the idea of becoming a new tax haven for foreign corporations by slashing corporate taxes. The Organization for Economic Cooperation and Development (OECD), however, has put in its opinion on the matter, and it says such an act is unlikely to entice foreign investment.
The United Kingdom (UK) joins the United States in losing its AAA credit rating from S&P.
The credit agency announced its downgrade of the UK on Monday, shortly after Moody’s cut the outlook on Britain’s economy. “In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K.,” the ratings agency said in a press release.
The result of the U.K. referendum on European Union membership has been a surprise and massive shock to so-called “expert” opinion.
In addition, not just to academic opinion: The betting markets, which are supposed to be inhabited by experts at setting odds, were assigning just a one-in-seven probability to a majority for “leave” on the eve of the vote.
