Europe: The Week Ahead (Mar 4-8), UK: You Say You Want To Leave The Union...?

By Steven Levine, Senior Market Analyst, Interactive Brokers

Uncertainties over the UK’s plans to leave the European Union has generally stirred unease across global financial markets, central bank monetary policies, as well as economic growth prospects.

Recent analyses of several European and international corporate sectors and commodities, including retailers, auto and telecommunications companies, as well as prices of gold and crude oil, all point to Brexit as a major catalyst.

The UK’s deadline to depart from the EU is scheduled for March 29, 2019, which is merely 30 calendar days away. 

Over the course of several domestic political disputes over how the UK should construct its exit, a long list of central banks, as well as the International Monetary Fund (IMF), have highlighted the near-term event as worrisome to economic growth.

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The Bank of Korea, for example, said Thursday that the pace of global economic growth has continued to slow “somewhat,” affected by factors such as trade protectionism, the paces of monetary policy normalization in major countries, and uncertainties over Brexit.

Brazil’s central bank also said at its monetary policy meeting earlier in February that the global outlook “remains challenging,” amid headwinds such as trade conflicts and Brexit.

In January, the International Monetary Fund had cut its global growth outlook from its assessment in October 2018, amid risks that have tilted to the downside, including U.S.-China trade-related tariff effects, a “no-deal” withdrawal of the UK from the EU, and a greater-than-expected slowdown in China.

According to the IMF’s World Economic Outlook, growth in the Euro Area is set to moderate from 1.8% in 2018 to 1.6% in 2019 (0.3 lower than anticipated last fall) and 1.7% in 2020. The WEO stated that growth rates have been “marked down for many economies, notably Germany (due to soft private consumption, weak industrial production following the introduction of revised auto emission standards, and subdued foreign demand).”

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Disclosure: The author does not hold any positions in the financial instruments referenced in the materials provided.

The analysis in this material is provided for information only and is not ...

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