The fifth circle of Brexit

Posted by: Paul Donovan

07 Feb 2019
  • The Bank of England is meeting. Rate hikes are being delayed by the interminably tedious EU divorce process. Uncertainty around this is delaying corporate investment. There is news that the next parliamentary debate on the divorce may also be delayed. In other words, the debate to delay the divorce, which is delaying investment in the UK, may be delayed.
  • German industrial production data is due amidst hints that the economy is continuing to pick up after the problems that plagued its businesses late last year.
  • The EU Commission will publish economic forecasts. Their accuracy is no better than anyone else's forecasts. However, these forecasts have a bearing on the polite fiction of the French and Italian fiscal positions. It is important to be able to pretend to be following the fiscal rules, and EU Commission forecasts can help or hurt that. The IMF was being mean about Italy yesterday, but no one is really surprised (or particularly cares what the IMF says).
  • UK weekly jobless claims and consumer credit enliven the data calendar. Meanwhile, Kaplan and Clarida of the Fed are speaking. The latter is commenting on the impact of global factors on the neutral US interest rate. Fun times.

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