It was an extremely busy end to the week for UK economic data and unfortunately most of it was far from encouraging. Figures released showed that the British economy’s growth slowed in the three months to November 2018. In the three months to October, the UK economy grew by 0.4%, but the latest reading came in at 0.3% – the slowest pace in six months. Much of the growth was driven by the services sector, while car manufacturing slumped to its biggest drop in industrial production since 2012.
However, despite the disappointing data, the pound jumped against the dollar just before midday following a report in the Evening Standard. The article said that Cabinet ministers had revealed that Brexit looks increasingly likely to be delayed beyond the scheduled exit of 29 March. The pound went as high as $1.2865 and touched above €1.12 during the day. It is felt that the fact there is a backlog of at least six essential bills that must be passed before the deadline increases the chances of a delay to the withdrawal.
Following on from worries over the German economy, economists at the Dutch bank ING suggested that Italy could be heading into a recession. Poor industrial production data for November, as well as poor confidence numbers, significantly increase the chances of the eurozone’s third largest economy entering a technical recession in the fourth quarter of 2018. These are certainly worrying times for the eurozone and the next few data releases will be watched closely.
As expected, annual inflation in the US dropped to 1.9% in the year to December from 2.2% the previous month, with a drop in petrol prices offsetting an increase in the cost of food. It is the lowest rate of inflation since August 2017 and consumer prices dipped by 0.1% to post the first monthly decrease in consumer prices in nine months.
There’s nothing much coming up this week – except the small matter of the vote on the Brexit Withdrawal Agreement! That’s coming up tomorrow and it looks almost certain that May’s bill will be defeated, but it is still unknown what will happen after that. May might resign, there might be a general election, we might leave without a deal, there could be a second referendum…nobody knows.
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