Beaufort Analysis No. 310 – A day is a long time in politics
Harold Wilson once said that a day is a long time in politics. If this past week has shown us anything, it is that even an hour can be a long time in politics. The week began with Theresa May intending to put her withdrawal agreement to Parliament for a vote, but by mid-morning on Monday, Number 10 had announced that the vote scheduled for Tuesday evening was being abandoned. The news broke early on Wednesday morning that fellow Conservative, Sir Graham Brady, had received the 48 letters required for a vote of no confidence in Theresa May as prime minister. Later that evening, the vote followed and Mrs May was successful in holding her post. She remains leader of the Conservative Party with no question of confidence for another year.
A bellwether indicator for confidence in the UK political climate is the sterling/dollar exchange rate, which reached a 20-month low of $1.25, a level not seen since the Brexit vote. Holiday-makers heading off to the States for festivities can expect an even lower rate at airport exchanges, who are offering a meagre $1.05 for each £1 to those purchasing currency at the terminal.
After a busy week at home fighting for her position in the party, Theresa May travelled back to Brussels to meet with other EU leaders to further negotiate her deal. President of the European Commission, Jean-Claude Juncker, has said there will be no more negotiations, only clarifications to the agreement.
At the European Central Bank, Mario Draghi has announced the end of the ECB’s quantitative easing programme. The Bank started to taper this programme in September this year, from €30bn of bond purchases a month, down to €15bn a month. It has also downgraded its growth forecast for 2019. The previous forecast was 1.8% and has been revised down to 1.7%.
As we all wind down for the festive period, we can still expect uncertainty from politics and the markets as we move ever closer to Brexit.
However, 2019 is a new year and fresh beginning so the festive period is always a time for hope and optimism. Wishing you a Merry Christmas and a Happy New Year.