||Summer Fancy Food Show
||Brexit Barometer: Findings and Actions
AIB Weekly Market Brief: 26th of June - 30th of June
Information for this article has been kindly supplied by AIB
The formal Brexit negotiations between the UK and EU kicked off last Monday, a year after the referendum vote. While the EU has set out a clear position on the talks, the UK’s stance remains very muddled, with conflicting signals on the approach being adopted. It seems clear that the UK is still set to leave the EU in March 2019, but the line adopted by Prime Minister May that “no deal is better than a bad deal” seems to have been discarded, having been seen to be judged by the electorate as nonsensical.
The UK wants to leave the Single Market and Customs Union, but continue to enjoy free trade with the EU post Brexit. The Chancellor, Philip Hammond, tried to square this circle in his Mansion House speech this week, by saying that while the UK would leave the Customs Union, it would remain an “associate” member, with the current customs border arrangements remaining in place until an EU-UK free-trade deal is up and running. He acknowledged this meant that while the UK could hold negotiations with third countries on free trade deals, it would not be able to enter any new deals during the transition period after it leaves the EU.
The discussions about the transition phase between when the UK leaves the EU and concludes a new trade deal with it, are likely to prove the crucial part of the Brexit negotiations. As the Chancellor hinted, the UK will have to abide by EU rules in this transition phase if it wants to maintain free access to the Single Market and avoid a hard Brexit. It is unclear if this is now the view of the British Government. It will be a bitter pill for many Brexit supporters to swallow, but their hand has been weakened by the outcome of the UK general election.
There is a sparse calendar in the UK. CBI trades data, Nationwide house prices (both June) and BoE mortgage approvals (May) are the main releases. In Ireland, we get the Q1 National Accounts. Data in the quarter pointed to continuing strong growth, with domestic production, retail sales, construction activity and the jobs market all performing well. Thus, we expect year-on-year growth to have remained strong in Q1, possibly up near 6%. The release will be of added interest as it includes the CSO’s new GNI* measure of underlying (i.e. ex-distortion from multinationals) economic growth. GDP/GNP figures have been highly distorted in the last couple of years.
Exchange Rate Forecasts (Mid-Point of Range)
||End Q2 2017
||End Q3 2017
||End Q4 2017
Current Rates Reuters, Forecasts AIB's ERU