“Companies and industry groups in Britain issued strident warnings against further political turmoil Wednesday after a challenge to Prime Minister Theresa May’s leadership underscored the strength of opposition in her own party to her government’s plan for Brexit.
“Underscoring the high stakes for business, a major UK manufacturing firm confirmed it has activated contingency plans. Airplane engine maker Rolls-Royce said that it has begun stockpiling parts to help minimize the damage from a disorderly Brexit.
“There are only 107 days to go before Britain is scheduled to leave the European Union, but parliament remains deeply divided on how to break with Britain’s biggest trading partner.
“Our firms are worried, investors around the world are baffled and disappointed, and markets are showing serious strain as this political saga goes on and on,” he added.
“Companies across the country have already taken steps to prepare for Brexit…
“The most worrying scenario for business is one where Britain crashes out of the European Union without a deal, leading to new trade barriers.
“Aerospace giant Airbus has said it could be forced to quit the country if there’s no deal on EU trading arrangements. Carmakers such as Nissan, BMW and Jaguar Land Rover are also heavily exposed.
“Mike Cherry, chairman of the Federation of Small Businesses, said that confidence among the group’s members has fallen to its lowest level since the financial crisis.
“”We don’t know what economic environment we’ll be operating within in only 100 days’ time … that makes planning ahead impossible,” he said, adding that firms are “crying out for some certainty about the future.”
“The deepening confusion over Brexit comes at a terrible time for the British economy.
“Data from the Office for National Statistics show the UK economy grew just 0.1% in October compared to the previous month. Industrial production fell 0.6% and manufacturing slumped 0.9%.
“The UK government says its Brexit deal will hurt the economy
The UK government says its Brexit deal will hurt the economy
Trading conditions are likely to worsen when Britain leaves the European Union on March 29.”
“Brexit is battering the UK property market, pushing it to its weakest level in more than six years, with almost half of surveyors reporting that sellers and buyers are sitting tight because of political uncertainty.
“The Royal Institution of Chartered Surveyors (Rics) said its monthly indicators for demand, supply and prices fell to multiyear lows in November.”
“Bonmarche’s chief executive Helen Connolly said: “The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9.
“I hope that in the fullness of time, our cut to the forecast may prove to have been overdone, but in the current market, this seems the appropriate stance to adopt.”
“It seems that in Italy misery loves company. In the midst of their own budget travails, Luigi di Maio and Matteo Salvini, Italy’s two powerful deputy prime ministers, now seem to be rejoicing in France’s budget problems. Before doing so, they might want to consider that far from reducing the chances that Italy will suffer another round of its sovereign debt crisis, recent French political developments heighten the chances that such an Italian debt crisis might occur sooner rather than later.”
“The European Central Bank is fully expected on Thursday to affirm its plan to end its bond-buying program at year-end. But investors expect less clarity when it comes to signaling when Mario Draghi and fellow policy makers will move to nudge up ultra-low interest rates… The ECB’s key lending rate, known as the refi rate, stands at 0%, while the rate on deposits held overnight at the central bank is at negative 0.4%.”
“Citi economist Dana Peterson detailed the shocking rise of global debt in a report called “Global Debt Clock – Are We Headed for a Global Debt Crisis?” “In 1999, global debt tallied to US$79 trillion, but has since swollen to US$247 trillion as of 1Q 2018 – a more than three-fold increase in level terms or by 211 percent… Ms. Peterson included Canada among nations most at risk of a credit crisis… the report concludes that households and corporations, not the banking system, are most at risk of credit upheaval in the next 3 years.”
“Chief financial officers at companies are pessimistic heading into 2019, with nearly half expecting a recession by the end of that year, according to a survey released Wednesday. Duke University’s look at where 212 CFOs stand showed that 48.6 percent think the next negative growth period is less than 12 months away. If the U.S. manages to make it through the year without a recession, 82 percent figure one will start by the end of 2020.”
“U.S. government debt is on track this year to rise at the fastest pace since 2012, as a stronger economy fails to keep pace with the wave of red ink that’s rising under the Trump administration. Total public debt outstanding has jumped by $1.36 trillion, or 6.6 percent, since the start of 2018, and by $1.9 trillion since President Donald Trump took office, according to the latest Treasury Department figures. The latter figure is roughly the size of Brazil’s gross domestic product.”
“Default risk for Chinese companies has climbed to the highest in 13 years as Beijing seeks to rein in its post-crisis construction boom, according to Moody’s Analytics…
“China has already seen a record pace of bond defaults this year, a consequence in part of policy makers’ efforts to reduce leverage in the financial system.”
““A cooling of the global economy will reduce demand for oil…” said former Lebanese Minister of economy and trade Nasser Saidi. More than 80 per cent of the revenue of the six nations – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates of the Gulf Cooperation Council (GCC) – comes from energy trade…
“World Bank senior vice-president Mahmoud Mohieldin said that the unemployment rate among Arab youths is 30 per cent.”
“The obsession with US shale oil is leading the world into an energy crisis. The world’s leading forecasting agencies have hailed shale’s tremendous growth as key to meeting oil demand in the coming decades.
“But by focusing on volume rather than quality, they are missing the point.”