UK: Still a long way to go - ING

James Smith, developed markets economist at ING, suggests that things are unlikely to shift rapidly as far as UK economy is concerned.

Key Quotes

“While some kind of cross-debate may be the only way to resolve the impasse, the government is set to reshape its deal from the current starting point and May is likely to begin discussions initially within her own party before crossing party divides. Meanwhile, the Labour Party is likely to resist initial pressure to back a second referendum.”

“In the short-term, focus now shifts to Monday when the government is obliged to return to Parliament to outline a new plan. This will be done in the form of an amendable motion, which means MPs can put forward their own alternative proposals.”

“For the economy, the upshot is that it could still be a few weeks before we know whether the Article 50 period will be extended, and potentially much longer before we know for sure whether 'no deal' has been avoided. This means that we're likely to see an increasing number of firms taking action, and this already appears to be playing out in the survey data. Partly for this reason, we expect economic momentum to remain sluggish and we think growth will remain contained in the 0.3% region for the first quarter.”