Brexit relief for UK economy might not last long

[snoop1130]

Brexit relief for UK economy might not last long

By William Schomberg

 

FILE PHOTO: Clocks in London's Canary Wharf financial centre strike 07:00 GMT, marking the time the polls open for Britain's general election, London, Britain December 12, 2019. REUTERS/Russell Boyce

 

LONDON (Reuters) - Britain’s economy will cast off some of the Brexit uncertainty that has held it back since 2016 after Prime Minister Boris Johnson’s election triumph, but the risk remains of another “cliff-edge” showdown with Brussels in a year’s time.

 

With Britain’s exit from the European Union on Jan. 31 now a foregone conclusion, the question for investors is whether Johnson will stick to his campaign promise not to delay the end-of-2020 deadline for a new EU trade deal.

 

That deadline is widely seen as tough to meet, given the scale of issues to be resolved.

 

In the short term, the biggest election victory for Johnson’s Conservative Party since Margaret Thatcher’s 1987 triumph removes a major brake on growth: the deadlock in parliament over how, or even whether, to proceed with Brexit.

 

Johnson said in a victory speech on Friday that Britain would leave the EU on Jan. 31 “no ifs, no buts, no maybes.”

 

His election win also banishes the prospect of a sharp shift to the left under the Labour Party which promised nationalisations, more power for trade unions and a much bigger role for the state, which had worried many business leaders.

 

“For Brexit, this all means that Johnson’s deal will be ratified, most likely allowing the UK to leave the EU at the end of January,” economists at ING said in a note to clients.

 

“But more importantly, it could give the prime minister the political breathing room to ask for an extension to the transition period.”

 

The pound jumped by the most in nearly three years on the first sign of the scale of Johnson’s victory and shares in companies that rely on domestic British economy rose. [GBP/]

 

Investors pared back their bets on the Bank of England cutting interest rates as the uncertainty about the way ahead for Britain’s economy lifted, at least in the short term.

 

The world’s fifth-biggest economy has slowed since voters decided to take Britain out of the EU nearly 3-1/2 years ago.

 

Leaving the bloc, which accounts for nearly half the country’s exports, is seen as a drag on its economic growth over the long term.

 

But the new sense of clarity about Brexit, at least in the short term, is likely to lead to a pick-up in the pace of growth in the coming quarters, economists said.

 

British government bond prices fell sharply as trading in London’s gilt markets opened, helped not only by the conclusive election result but also by signs of an end to the U.S-China trade deal that has weighed on the global economy. [GB/]

 

But economists turned their attention quickly to what the election result meant for Johnson’s longer-term Brexit plans.

 

He promised during the election campaign not to extend a Brexit transition period beyond Dec. 31 2020.

 

That raises the prospect of tariffs and other barriers coming into force for Britain’s trade in goods and services with the EU in just over a year’s time.

 

Economists at RBC Capital Markets said the new government would probably try to keep a no-deal Brexit on the table for as long as possible to maintain leverage with the EU in the trade talks.

 

“However, with such a comfortable winning margin Johnson is not reliant on any faction of his party, in particular the hard-Brexiteers who might have tried to steer him toward a hard Brexit at the end of the transition period,” they said.

 

“Some form of extension now looks more likely even if some effort will be made to give the impression that is not the transition period that the Conservative Party promised not to extend in its manifesto.”

 

But economists at Citi said they thought Johnson would not try to delay the transition phase because he won support from voters who backed the Conservatives for the first time because of the party’s tough stance on Brexit.

 

“In this scenario, when the UK exits the EU Single Market and Customs Union on 31 December 2020, we expect a mild recession to follow in 2021 as divestment among exporting sectors accelerates,” they said.

 

-- © Copyright Reuters 2019-12-13

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[uesnyc]

NYT columnist and Nobel prize winning economist Paul Krugman said the US economy would crash after the 2016 elections.

Makes me wish I was holding some GBP right now.

 

 

[Loiner]

More Reuters gloom about the UK’s prospects. are they constantly trying to talk down the UK for overseas consumption only?
 

Hasn’t anybody told them that it’s all over now? Project Fear didn’t work before and it won’t work now that Boris will take us from the EU clutches in about six weeks. 

[RichardColeman]

15 hours ago, snoop1130 said:

Brexit relief for UK economy might not last long

Yahoo editor at work ?  ????

[HHTel]

10 hours ago, Loiner said:

Hasn’t anybody told them that it’s all over now? Project Fear didn’t work before and it won’t work now that Boris will take us from the EU clutches in about six weeks. 

But it's far from over.  There is a long period following in which to work out a trade deal.  Many in the EU agree that will go into 2021 and possibly into 2022.

[Henryford]

But of course Boris will not take us out. Just an interim period until we join again when the next labour Government gets in.

[sanemax]

11 minutes ago, Henryford said:

But of course Boris will not take us out. Just an interim period until we join again when the next labour Government gets in.

If Boris will not take us out.................why would we need to join again ?

You didnt think that through, did you .

[hotchilli]

11 hours ago, Loiner said:

More Reuters gloom about the UK’s prospects. are they constantly trying to talk down the UK for overseas consumption only?
 

Hasn’t anybody told them that it’s all over now? Project Fear didn’t work before and it won’t work now that Boris will take us from the EU clutches in about six weeks. 

Best news ever, now people can start to work towards the future they voted for 3 years ago.

trade deals will start immediately with those who wish to trade, UK has been trading for centuries with Europe... those who said we would collapse and die were liars!

Corbyn should dig a hole & jump in head first.

EU needs foreign customers in UK and vice versa., leave the trade of the country to the people they don't need government deals all the time!

[ivor bigun]

1 hour ago, Henryford said:

But of course Boris will not take us out. Just an interim period until we join again when the next labour Government gets in.

in about 20 years if they are lucky .

[billd766]

2 hours ago, Henryford said:

But of course Boris will not take us out. Just an interim period until we join again when the next labour Government gets in.

I am 75 now and I will belong dead and gone before Labour get back into power.

Corbyn may have resigned, but there are many more like him in the Labour party.

[Thingamabob]

18 hours ago, uesnyc said:

NYT columnist and Nobel prize winning economist Paul Krugman said the US economy would crash after the 2016 elections.

Makes me wish I was holding some GBP right now.

 

 

...does Krugman ever get anything right ? 

[puipuitom]

15 hours ago, Loiner said:

More Reuters gloom about the UK’s prospects. are they constantly trying to talk down the UK for overseas consumption only?
 

Hasn’t anybody told them that it’s all over now? Project Fear didn’t work before and it won’t work now that Boris will take us from the EU clutches in about six weeks. 

Brexit ( and the financian + economical consequenses) still did not start yet, probably when it is clear a trade deal wibetween UK and EU is NOT going to happen, and Boris decides to have a hard Brexit, end of Dec 2020.

I hope your "project fear" is the same as the millenium bug, but looking to my own business, quite some EU businesses are NOT so interestd in UK products ( spare parts, components, branded items) , as.. no idea, what might happen in 13 months.

[puipuitom]

4 hours ago, sanemax said:

If Boris will not take us out.................why would we need to join again ?

You didnt think that through, did you .

Who said, the EU will accept the UK ( or what is left of it in a few years) as a member again ?

Remind, this is NOT decided at Downing street nr 10, but in the EU Council, existing of the heads of governments of the EU member states. And 1 Feb. the UK is no longer a member, so has to say as much as the prime minster of Argentina or Zimbabwe.

[andersonat]

3 hours ago, hotchilli said:

Best news ever, now people can start to work towards the future they voted for 3 years ago.

trade deals will start immediately with those who wish to trade, UK has been trading for centuries with Europe... those who said we would collapse and die were liars! 

 

I know several people who though they didn't exactly "collapse and die", they did have problems after their jobs disappeared - that happened not because of the 'uncertainty' surrounding Is-Brexit-going-to-happen-or-not-after-the-referendum, but directly because of the result of the Brexit-referendum.  

 

[hotchilli]

43 minutes ago, andersonat said:

 

I know several people who though they didn't exactly "collapse and die", they did have problems after their jobs disappeared - that happened not because of the 'uncertainty' surrounding Is-Brexit-going-to-happen-or-not-after-the-referendum, but directly because of the result of the Brexit-referendum.  

 

And I know some that gained fruitful employment when the Brexit vote was carried to get out.... employment swings both ways!

 

[ivor bigun]

54 minutes ago, puipuitom said:

Who said, the EU will accept the UK ( or what is left of it in a few years) as a member again ?

Remind, this is NOT decided at Downing street nr 10, but in the EU Council, existing of the heads of governments of the EU member states. And 1 Feb. the UK is no longer a member, so has to say as much as the prime minster of Argentina or Zimbabwe.

doubt if the EU will survive in its present form ,Germany is already going into recession and France has major problems ,who else will there be to pay for it?

[sanemax]

1 hour ago, puipuitom said:

Who said, the EU will accept the UK ( or what is left of it in a few years) as a member again ?

 

No one said that . 

[rabas]

1 hour ago, Thingamabob said:

...does Krugman ever get anything right ? 

No.

[dunroaming]

There is always a sterling bounce after an election, especially if it is a Tory win.  However these are not normal times and the future is still uncertain.  It is only the beginning and nobody knows what sort of Brexit we will finally end up with.  We will not see the wood for the trees for at least a year and that is only if Boris delivers on his time scale.  In the meantime the Tories have made a lot of commitments in their election campaign which will mean borrowing a vast amount of money to fulfil. Of course Johnson could say that we have to wait for any of that until after the transition period is completed.

 

Truth is none of know and with Boris's reputation of lying through his teeth, he has a lot of convincing to do to get people to trust anything he says.

 

At least we can go into the new year knowing that Corbyn and Farage are gone and are unlikely to return.  You can be sure that Johnson will continue to be scrutinised by a very sceptical public.

[andersonat]

2 hours ago, hotchilli said:

And I know some that gained fruitful employment when the Brexit vote was carried to get out.... employment swings both ways!

 

 

"My" people had well-paying jobs: a Banker, a Lawyer, and a Manager in a car-factory.

 

 -  What kind of jobs did "your" people find ? 

 

[rott]

On 12/14/2019 at 3:14 PM, Thingamabob said:

...does Krugman ever get anything right ? 

I would enjoy a few examples of his errors. I used to read his column in the Bangkok Post.

[thisisrascal]

Pound strength will continue fundamentally for years to come as capital inflows coming back to the U.K. now will support the pound. It will also benefit from a slowly changing tide in favour of non-US assets. 

[Bell1234]

The tables have turned.. The EU eon't be calling the shots anymore with the majority Boris Johnson has.. A No deal trade deal will hurt them just as much.

[david555]

On 12/14/2019 at 5:03 PM, ivor bigun said:

doubt if the EU will survive in its present form ,Germany is already going into recession and France has major problems ,who else will there be to pay for it?

Oh yes damn …. as you where the only one who payed money in the E.U. treasure case ……???? 

 

(Really there is no hope for those Imperialistic believers in "Britannia rules the waves "....  ???? )