- Theresa May will stay on, as 200 MPs voted for her, but will step down before 2022 election
- All Brexit outcomes still on the table, ranging from reversing Brexit to a no-deal Brexit
- Uncertainty will linger for a long time yet, dampening economic activity and weighing on the pound
- Trump has announced plans to impose tariffs of up to USD 60bn on Chinese imports
- Markets reacted with broad-based significant risk aversion
- Chinese retaliation might be on the cards
Today's speech unlikely to provide the clarity that Brussels is asking forPrime Minister May will give a speech on the UK’s Brexit vision today (expected at 13:30 GMT). Some of the content has already been leaked to the media, and it appears that the speech is unlikely to provide the clarity that Brussels is asking for. May’s problem is trying to reach out to Brussels but at the same time please both the very vocal Brexiteers in her own cabinet and the Remainers in her own party who are threatening to team up with Labour in coming votes in Parliament.
- Efforts to end government shutdown continue
- Economic impact of short-lived shutdown should be limited
- Larger, more serious issues loom
- GDP growth forecast revised down, now well in line with our expectations
- Fiscal policy somewhat more expansionary than expected, but no breach of fiscal rules
- Fiscal policy still contractionary, but less so than assumed in March
- The UK government aims for 'status quo' transition period of two years
- The UK still wants bespoke deal; a solution like the one for Norway or Canada will not be enough
- Our take: transition period will buy more time, but hard Brexit still the most likely outcome