- UKIP leader Nigel Farage resigns for the second time
- UK construction suffers biggest fall since 2009
- George Osborne to slash corporation tax to encourage businesses to continue investing in the UK
- Angela Merkel and Jean-Claude Juncker disagree over Brexit handling
- Business leaders to prevent triggering of article 50 unless with full consent of Parliament.
What a busy couple of weeks it has been, the news on June 24th prompted some of the worst political turmoil seen in history and it doesn’t look as through things are settling in the immediate future.
As we try to put aside the political drama and attempt to refocus on the economic data, the release this morning surrounding the PMI Construction figures should come as a concern at a time when the UK housing market is short and housing contracts are at their highest levels since 2012.
The results could fuel concerns that a Brexit could hurt building firms if clients lose confidence due to future uncertainty.
A Brexit recession?
It is yet to be seen how a Brexit is hurting the economy but George Osborne’s plan to cut corporation tax, keeping businesses in the UK is of grave importance and this move is an attempt to sway large corporations from moving their offices overseas, potentially saving thousands of jobs.
But what can we learn from a Brexit? Uncertainty is driving the market, and the impact this uncertainty is having could spill into business decisions and consumer spending. Keep your eyes peeled on Tuesday’s Financial stability report from the BoE, there could be big clues in what to expect in the coming months.
What will happen to the EU after Brexit?
The political conflict is not just happening in the UK, the EU is starting to show cracks with the likes of Angela Merkel and Jean-Claude Juncker in dispute over the treating of the UK’s vote, prompting Merkel to call for Juncker’s resignation.
The split in opinions seem to boil down to deeper integration within Europe, whilst Merkel and German Finance Minister Schauble have labelled it ‘crazy’. This split in differences demonstrates how vulnerable the UK and EU are in regards to deals, too many opinions could lead to longer negotiations and further disintegration.
Will article 50 be invoked?
It’s becoming further unclear as to when article 50 will be invoked, big businesses are now looking to block article 50 without the full backing of Parliament. Whether this is the early steps of blocking the public’s vote or whether article 50 will be left untouched for an extended period of time is unclear, but it’s looking less and less likely that it will be triggered in September when the new Prime Minister steps in.
This period of volatility will likely continue and with very little formalities and plans in place, it’s very possible that Pound could find further weakness as we approach 2017.