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Edition April 25, 2018 - Crédit Agricole S.A.
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  • Edition April 25, 2018

    United-Kingdom 2018-19 Scenario: outlook as at Q1 18

    Negotiations on Brexit have moved forward since a preliminary divorce agreement was signed last December. The United Kingdom has ended up softening its red lines somewhat, without this leading to a major political crisis. The European Union has shown some flexibility while remaining firm on its fundamental principles. An agreement on a transition period was concluded in March. However, the hardest part is yet to come, with the Irish border issue to be settled by June.

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  • Content:

    - Overview: Raising our growth forecasts
    - Focus: Brexit & the future relationship with the EU
    - Latests economic developments
    - Basis

  • Extract – Brexit: progress, but the hardest part is yet to come

    Prime Minister Theresa May shifted her position in her 2 March speech towards a more pragmatic approach, to ensure the broadest possible access to the single market without threatening to break off negotiations. She softened her message and made concessions to the EU without her legitimacy being challenged. In our view, the most significant progress in the negotiations consists, on the one hand, of the (conditional) agreement over a transition period and, on the other, the aim on both sides to negotiate a free trade agreement that seeks to maintain zero tariffs and which covers services. Another important step is the agreement on a ‘back-stop' solution to the Irish border question. Given the UK government's commitment (no border between the two Irelands), it could be forced to opt for a customs union with the EU, or even staying in the single market, for want of other realistic solutions.

  • UK: PMI surveys of the economic climate

    The Purchasing Managers' Index (PMI) surveys deteriorated in Q1, for both manufacturing industry and services, as the snow in March weighed on activity. The manufacturing PMI dropped to 55.1 on average over the quarter against 56.9 in Q4. New orders posted their weakest pace of growth since June 2017. In services, the index lost 2.5 points to 53.1.

    UK: PMI surveys of the economic climate
  • Associative topics : Economics | Europe

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