European Commissioner for Economic Affairs, Pierre Moscovici today after Mrs May spoke at Davos World Summit suggested Brexit will be bad for both the EU and UK. Mrs May has been explicit in several speeches of late that the UK will be leaving and they will be open for new trade deals.
The main threat surrounding Britain’s exit and why the EU may have to negotiate is the Prime Minister will turn the UK into a tax haven so to speak. Britain’s economic policy would be based on attracting big business to the UK and making it to lucrative for them not to be based here. Whilst that may not be what the PM wants to do, she might have to threaten it to get what she wants.
ECB keeps all things the same
Mario Draghi announced this afternoon that the interest rate and bond buying program will continue unchanged, this is despite an uptick of inflation across the Eurozone. Whilst an interest rate hike may have come as a surprise many were expecting a positive outlook with a hike potentially on the cards. However, President Draghi suggested that the upward trend has not been enough to consider any monetary policy changes.
Chairlady Janet Yellen, who leads the US Federal Reserve earlier this month suggested as inflation grows so would the interest rate. It may be that if this does happen the Draghi may also follow suit with this trend. Germany are pushing hard for the ECB to increase the interest level, however some of the struggling economies need the rate to remain at that level to aid recovery.