Nightmare before Christmas or Miracle on 10 Downing Street?


By Sarah Ryman




With Boris Johnson having won the largest Conservative majority since the 1987 general election, the party won’t have long to revel in their victory. Work will now continue to address the passing of the Withdrawal Agreement legislation to ensure the UK is set to leave the EU by the deadline of 31st January 2020. The Brexit Bill is set to come before the commons ahead of Christmas and the Great British Pound surged to a 19-month high against the US Dollar in the hope that this news will result in greater certainty around Brexit. 


The election has raised significant questions about the future of Scotland within the United Kingdom with the anti-Brexit Scottish National Party sweeping up most of the seats north of the border.


The UK services sector contracted last month at the fastest pace since March, a survey from IHS Markit showed this month. Consumer spending seems to have been impacted by domestic political uncertainty and the data suggests that the UK will stagger through the last quarter of 2019. 


Meanwhile, the new governor of the Bank of England is expected to be named within days to succeed Mark Carney who leaves at the end of January.


Eurozone manufacturing activity has contracted for the tenth straight month in November according to recent figures, but IHS Markit’s manufacturing Purchasing Managers’ Index (PMI) did rise slightly to 46.9 which was better than expected.


In other news, Christine Lagarde held her first press conference this month having taken up the European Central Bank (ECB) helm. She opened her reign promising not to be a hawk, nor a dove but an owl. “Associated with a little bit of wisdom,” explained Lagarde. The pledge came as the ECB kept interest rates on hold at record lows and downgraded its 2020 growth forecast for the area to its lowest since 2014. 


Given that output has barely increased and statistics would suggest that the manufacturing recession has deepened over the month, the area is not without its challenges. Credit rating agency Moody’s has downgraded its outlook for European banks to ‘negative’ predicting that weak economic growth will negatively impact profits over the coming year.




President Trump dented the global stock markets at the start of the month taking them back down from all-time highs when he announced - via Twitter - that he will put tariffs on steel and aluminium imports from Brazil and Argentina. Wilbur Ross (Trump’s commerce secretary) then added fuel to the flames threatening further increases to tariffs for China if Beijing does not strike a trade deal with the US by the 15th of this month. As I write, Asian stock markets have rallied as the US and China seem to have agreed an ‘in principle’ trade deal with each other. The trade war that has been ongoing for over 18 months dampening global growth appears to have made progress with the US agreeing to remove some tariffs while Beijing has agreed to boost purchases of US farm goods. Optimism surrounding the trade deal has supported equities despite the US also vowing to slap tariffs of up to 100% on $2.4 billion of French goods this month.


The US had good employment data with the unemployment rate dropping to 3.5% from the previous reading of 3.6%. The US Federal Reserve left interest rates on hold this month as expected bringing the rate cutting cycle that started in July to an end, or at least to a pause. With employment having picked up and Jay Powell (Fed Chair) commenting that the economic outlook remains a favourable one, the market is not expecting any further adjustments until well into 2020; the Fed’s target interest rate will stay between 1.5% and 1.75%. World interest rate probability for the US suggests that the next move lower isn’t expected until summer 2020 and the market is forecasting three cuts in 2020 to support economic growth.


This leaves me with nothing further to say than – thank you for reading over the last year, I look forward to the commentaries that lie ahead in 2020 and wish you and your families a very happy festive period. 



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