The pound continues to benefit from last week’s upswing, albeit slightly reduced from the highs of Wednesday. However, UK factories have been slashing jobs and stockpiling at a record rate, as manufacturing is hit by Brexit uncertainty. Markit’s monthly report on British manufacturing reveals that Brexit has driven firms to stock up on raw materials and components in case of trade disruption.
The UK’s manufacturing PMI showed slower growth in February; however, is better than the weakness suffered by the Eurozone factories. Coming up today, Markit’s construction PMI is expected to show that Brexit uncertainty is hurting the building industry.
Meanwhile, the Sunday Times reported that the ERG has laid down three tests that the PM needs to meet to gain their support for her deal. These are a legally binding clause that ‘unambiguously overrides’ the text of the withdrawal agreement, stronger language that the Irish border backstop plan will be temporary, and a ‘clear and unconditional route out of the backstop if trade talks fail’.
This signals that the ERG are prepared to fall into line and potentially back Theresa May’s deal. It will be interesting, however, to see if she succumbs to these requests. As it stands, nothing is tabled in the House of Commons this week on Brexit voting.
