UK: Positive developments - Westpac
Analysts at Westpac suggest that while the market view this week’s developments in the UK economy as a positive (given their view that they raise the chance of a soft-Brexit or no-Brexit outcome), the reality is that the harshest possible outcome (a no-deal Brexit) is the default result.
“Reports also suggest PM May is against a softer-Brexit – where the UK stays in the customs union permanently. Negotiations between PM May’s Conservatives and the other parties have begun in pursuit of a compromise, but given PM May’s strident position and Labour leader Jeremy Corbyn’s unwillingness to take part as long as a no-deal Brexit remains a possibility, a near-term deal seems highly unlikely.”
“European officials are willing to allow an extension of the negotiating period past 29 March, but at this juncture it is not clear this will be productive either. Uncertainty over the UK outlook therefore looks set to remain rife into mid-year, causing the UK economy further material harm.”