UK economy stalls as Brexit, political worries hit manufacturing output

A Bank of England policymaker, Gertjan Vlieghe, hinted at a potential vote in favor of a January cut to the BoE’s main interest rate. (AFP)
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Updated 13 January 2020

UK economy stalls as Brexit, political worries hit manufacturing output

  • UK’s monetary policy committee looking at the merits of near-term stimulus
  • Britain’s parliament last week finally approved Brexit, ending years of arguments that toppled two UK governments

LONDON: Britain’s economy has stalled, official data showed Monday, as Brexit and political uncertainty contributed to slashing manufacturing output, heaping pressure on the Bank of England to cut interest rates.
Gross domestic product contracted 0.3 percent in November, the Office for National Statistics said in a statement. It grew only 0.1 percent in the three months to the end of November, the ONS added.
Manufacturing meanwhile slumped 1.7 percent in November.
Speaking ahead of the data a Bank of England policymaker, Gertjan Vlieghe, hinted at a potential vote in favor of a January cut to the BoE’s main interest rate, weighing on the pound Monday.
It followed comments Friday by fellow policymaker Silvana Tenreyro, who said she could support a rate cut from the current 0.75-percent level, if the economy did not strengthen.
And on Thursday, the bank’s outgoing governor, Mark Carney, said the monetary policy committee was looking at the merits of near-term stimulus.
As for the latest GDP data, “a poor performance in November was always on the cards given that the uncertainties facing the economy were at a peak with the general election looming and doubts over what would happen on the Brexit front after it had been delayed again from 31 October,” noted Howard Archer, chief economic adviser to financial researchers EY ITEM Club.
“It is clear that businesses were cautious in their behavior while it also appears that consumers were reluctant to spend.”
British Prime Minister Boris Johnson’s Conservatives convincingly won a general election in December that has broken the deadlock over the UK’s departure from the European Union.
Britain’s parliament last week finally approved Brexit, ending years of arguments that toppled two UK governments.
“We expect the economy to get a lift in the early months of 2020 from a more settled domestic political environment following the Conservatives substantial win... and an easing of near-term Brexit uncertainties as the UK leaves the EU with Johnson’s deal on 31 January,” said Archer.


Aramco international listing ‘still on the cards’: Saudi finance minister

Updated 12 min 23 sec ago

Aramco international listing ‘still on the cards’: Saudi finance minister

  • The minister said that he was “very confident” that the Saudi economy was picking up speed
  • He said that international investors had responded positively to ongoing reforms in the Kingdom

LONDON: Saudi Finance Minister Mohammed Al-Jadaan said that an international listing of Saudi Aramco was “still on the cards” but likely won’t happen soon.
He made the disclosure in an interview with Bloomberg News at the World Economic Forum’s annual meeting in Davos, Switzerland on Wednesday.
The minister also said that he was “very confident” that the Saudi economy was picking up speed, as the Kingdom successfully completed a $5 billion bond sale this week after receiving orders for four times as much.
“Yesterday showed very clearly that demand for Saudi credit is very high and very healthy. We are very pleased not only with the level of debt but also the pricing,” he said. “Demand is very positive. We are starting seeing results of Vision 2030. The numbers are proving that reform is working. We are basically cashing on the successes.
The minister said that international investors had responded positively to ongoing reforms in the Kingdom.
“I think investors are focusing on fundamentals,” he said. “They see the growth they see the potential. We are seeing a growth in FDI, a growth in the number of applications for licenses. The confidence is back in a strong way.”