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Fog in the Channel – EU cut off

| Posted by: Paul Donovan | Tags: Paul Donovan

  • UK PM May finally gives the speech she has spent the last few days leaking. "Brexit really means Brexit" and it seems that the EU will be cut off, relegated to becoming an economy of a mere 450 million people with a GDP of around USD 13.5trn on the fringes of the UK.
  • It may be worth looking out for some issues around today's remarks: comments on a corporate tax "race to the bottom"; immigration; the threat of another Scottish independence referendum (oil is 23% lower in sterling terms than on the day of the last referendum).
  • The Euro area offers its bank lending survey. Divergence of bank lending in the Euro area creates divergence of economic activity. Divergence of economic activity risks divergence of inflation. Divergence of inflation risks creating a headache for the ECB.
  • The US has less to divert investors – the Empire State regional opinion poll on manufacturing activity may generate a bit of interest around any indicators of labor market tightness. Fed President Dudley speaks on the consumer, which may be of some interest. The Fed's Williams also speaks.