Definitely NOT plain sailing………
IMF warns of hit to UK economic growth.
The International Monetary Fund has cut its forecast for UK economic growth next year as it warned that the global recovery remains "weak and precarious". Although the IMF raised its prediction for UK GDP growth this year to 1.8%, the figure for 2017 was cut to 1.1%. Its assumptions are based on "smooth post-Brexit negotiations and a limited increase in economic barriers". The IMF's latest World Economic Outlook predicts "subpar" global growth this year of 3.1%, rising slightly in 2017. Chief economist Maurice Obstfeld said: "Taken as a whole, the world economy has moved sideways. Without determined policy action to support economic activity over the short and longer terms, sub-par growth at recent levels risks perpetuating itself." A fall in US growth this year to 1.6%, down from the previous 2.2% forecast, will be offset by increases in countries including Japan, Germany and Russia and India, the IMF said.
Hard Brexit 'could cost financial sector £38bn'.
The financial industry could lose £38bn if the UK quits the single market, a report commissioned by a group lobbying on behalf of the City has said. The report, commissioned by TheCityUK, also said up to 75,000 jobs could go. The sector is concerned at the prospect of a so-called "hard Brexit", with the UK leaving the EU single market in order to regain control of immigration. On Sunday, the Prime Minister said "we are not leaving the EU only to give up control of immigration again". Her comments helped to trigger a fall in the pound, which dropped to a 31-year low against the dollar on Tuesday. The report, which was written by management consultancy Oliver Wyman, modelled several possible outcomes for the UK financial services industry after Brexit. In one scenario, it said the UK might retain access to the European Economic Area on similar terms, meaning it would be able to continue trading across the bloc without the need for individual country licences.
This would cause less disruption, it said, costing the industry up to 4,000 jobs and £2bn of revenues a year. However, another scenario would see the UK quit the bloc "without any regulatory equivalence". This would cost the industry up to £20bn and 35,000 jobs, it said - although the "knock-on impact" on related business activities could cost a further £18bn and 40,000 jobs. Hector Sants, head of Oliver Wyman and former chief executive of the Financial Services Authority, told the BBC's Today programme: "We are not taking a view on the outcome of the negotiations. "What we have done here is to create a robust and independent database." He said he hoped the research would create a dialogue between the City and government. "We are confident that these are numbers that people can coalesce around and discuss."
Easyjet warns of £90m currency hit.
Easyjet has warned that the weakened pound will cost it £90m in its current financial year. That is more than double its original estimate made in July, when it warned of a £40m hit. Jet fuel is priced in dollars, so the falling pound has made it more expensive for Easyjet to run its aircraft. Easyjet expects a profit of between $490m and £495m for its financial year, which ends on 30 September. That would be down 28% on the £686m annual profit it made in 2015. It would also be the first fall in annual profits since 2009. Shares closed down by nearly 7% to 933.5p. "The current environment is tough for all airlines, but history shows that at times like this, the strongest airlines become stronger," said Carolyn McCall, Easyjet chief executive. The problem for Easyjet is that although it has been flying passengers in record numbers, those passengers have been enjoying lower ticket prices. Easyjet expects revenue per seat to be down 8.7% for the year and expects ticket prices to fall further in the coming months.
Fraser of Allander report: Brexit could cost 80,000 jobs.
Scotland could lose between 30,000 and 80,000 jobs as a result of Brexit, according to an economic analysis. But the Fraser of Allander Institute said the Scottish economy would be "cushioned" from the likely impact compared with the rest of the UK. A report suggested that Brexit could lead to more migration to Scotland from other parts of the UK. Prime Minister Theresa May has insisted Scotland and the UK could "get a better deal abroad" after leaving the EU. Holyrood's Europe committee convener Joan McAlpine said the outlook was "grim", and warned there could be a "huge constitutional crisis" if Holyrood was not consulted about the "Great Repeal Bill", which severs ties between the EU and the UK. The report from the Fraser of Allander Institute examines a series of potential post-Brexit scenarios. These range from an "optimistic" model similar to Norway's relationship with the EU to a "pessimistic" one based on a so-called "hard Brexit" outside the single market, based on World Trade Organisation rules. The group said the most optimistic outlook would see Scottish GDP drop by 2% within 10 years, causing the loss of 30,000 jobs. The most pessimistic model would see GDP 5% lower within a decade, with 80,000 fewer jobs in the economy.
Hammond urges calm over pound flash crash.
The Chancellor Philip Hammond has responded to the flash crash in sterling saying that market turbulence is to be expected, but the country is fundamentally strong. The pound was pummelled in the currency markets in Friday Asian trading, with traders blaming concerns over Brexit and a flash crash that hit the market. The pound fell 6% to $1.1841, the biggest move since the Brexit vote. The pound later recovered some of those losses but remained volatile. Analysts think a news report could have triggered automated trading systems to sell the pound heavily in a short space of time. Mr Hammond told the BBC: "Some of what happened over night was driven by technical factors, as the Bank of England governor has explained this morning. Markets will go up and down - markets respond to noises. We are going to go through a period of volatility, there will be lots of commentary going on and we can expect to see markets being more turbulent over this period and we should prepare for that. The important thing is to look through the movements of currency markets and short term movements of sentiment.... we go into this period of turbulence fundamentally strong." The pound was down 1.7% against the dollar at $1.2421, in afternoon trading in London, with analysts blaming concern over the UK's negotiations to exit the European Union.
All details above from BBC News website.
[We’re still getting very mixed messages from the Government over what Brexit actually means – apart from Brexit. There appears to be two sides, one going for ‘hard’ Brexit and the other going for a softer cuddlier version. Which to be honest sounds exactly like you’d expect the Conservatives to sound on the issue. Of course ‘hard’ Brexit is the equivalent of slamming on the brakes seconds before going over a cliff whereas ‘soft’ Brexit is more of a slow deceleration before driving off a cliff – so a difference of relaxing into disaster rather than the sudden jolt of it all. My guess is that we’ll go hard because if you’re going to fuck things up there’s no point in half measures.]