No Brexit more likely than a disorderly one, say economists: Reuters poll

By Jonathan Cable LONDON (Reuters) - The chances that Brexit will be cancelled are now greater than the chances Britain will leave the European Union without a deal, according to economists in a Reuters poll, who again pushed back their expectations for when the Bank of England will raise interest rates. Last week, the EU delayed Brexit until the end of October, averting for now the risk of an abrupt British departure, which investors and policymakers fear would hurt both economies. In the latest monthly Reuters survey, taken April 12-17, the median probability Britain and the EU will part ways in a disorderly fashion - where no deal is agreed - held steady at the 15 percent given in March, the lowest since Reuters began asking in July 2017

Reuters April 18, 2019 06:05:55 IST
No Brexit more likely than a disorderly one, say economists: Reuters poll

No Brexit more likely than a disorderly one say economists Reuters poll

By Jonathan Cable

LONDON (Reuters) - The chances that Brexit will be cancelled are now greater than the chances Britain will leave the European Union without a deal, according to economists in a Reuters poll, who again pushed back their expectations for when the Bank of England will raise interest rates.

Last week, the EU delayed Brexit until the end of October, averting for now the risk of an abrupt British departure, which investors and policymakers fear would hurt both economies.

In the latest monthly Reuters survey, taken April 12-17, the median probability Britain and the EU will part ways in a disorderly fashion - where no deal is agreed - held steady at the 15 percent given in March, the lowest since Reuters began asking in July 2017.

Only one of 51 respondents gave a value over 50 percent.

"Apart from the fact that no-deal Brexit is now less likely, the path ahead is as unclear as ever. A deal (and likely a softer Brexit) still seems more likely than not," BNP Paribas economists said. "But we are sceptical that this will happen any time soon."

That chimed with the views of most economists polled, who said the two sides would settle eventually on a free-trade deal - as they have in all Reuters polls since late 2016.

Britain being a member of the European Economic Area, paying into the EU budget to maintain access to the EU's single market, was again in second place.

But the third and fourth spots flipped from last month, so leaving without an agreement and trading under World Trade Organization rules fell to least likely. Brexit's being cancelled reclaimed third place, a ranking it has only held once before.

Looking at a like-for-like comparison of contributors to this and March's poll showed the same change in views.

HOLD IT

None of the 75 economists polled expect Bank Rate to be moved from 0.75 percent when the Bank of England's Monetary Policy Committee announces its decision next month. The MPC will publish its quarterly update of economic forecasts the same day.

"Without Brexit uncertainty, the Bank of England might have considered raising interest rates at the May 2 inflation report meeting. With the country still in limbo politically, this is highly unlikely," said Elizabeth Martins at HSBC.

Medians suggest the first rate increase of 25 basis points will come early next year, one calendar quarter later than was forecast a month ago. Bank Rate will then stay at 1.00 percent throughout 2020, the poll predicted.

Britain's economy dodged the expected post-Brexit referendum recession, but growth has slowed as uncertainty holds back investment.

UK wage growth hit a decade high in the three months to the end of February, but that was mainly driven by companies taking on workers - who can be fired relatively easily if the economy slows - rather than committing to longer-term investments.

The economy is predicted to grow a modest 0.2 to 0.4 percent per quarter through to the end of next year, similar to forecasts for the euro zone.

Those median forecasts for Britain were weaker than last month's. But the chance of a recession in the coming year held steady at the 25 percent given in March. They fell to 25 percent within the next two years from 30 percent.

Inflation held just below the BoE's 2 percent target at 1.9 percent last month, official figures showed on Wednesday. Thursday's poll said it would be at or around the Bank's target through to the end of next year.

"While a few one-off factors might see headline UK inflation rebound a touch in the short-term, the overall outlook is benign and we do not expect a rate hike from the Bank of England this year," said James Smith at ING.

(Polling by Sarmista Sen and Hari Kishan, editing by Larry King)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Airline easyJet's first-half loss widens as COVID-19 hurts travel, seeks cash
Business

Airline easyJet's first-half loss widens as COVID-19 hurts travel, seeks cash

(Reuters) - Budget airline easyJet on Wednesday reported a bigger loss for the first half as it took a 160-million-pound hit ($199 million) from failed fuel hedging as the COVID-19 pandemic brought global air travel to a virtual standstill. The London-listed company reported a pretax loss of 353 million pounds for the six months ended March 31 from a loss of 272 million pounds last year. Revenue rose 1.6%, though easyJet took a hit from strikes in France, and storms Ciara and Dennis.

Bayer settles Roundup cancer lawsuits for up to $10.9 billion
Business

Bayer settles Roundup cancer lawsuits for up to $10.9 billion

FRANKFURT (Reuters) - Bayer AG on Wednesday said it agreed to settle U.S.

Sudan to establish trade financing fund in face of forex shortage
Business

Sudan to establish trade financing fund in face of forex shortage

KHARTOUM (Reuters) - Sudan will create a trade financing fund with a portfolio of $2 billion to aid the import and export of key commodities such as wheat, the Finance Ministry said, as the supply of foreign currency in circulation dwindles. Sudan's economy is at risk of freefall, hammered by an inflation rate of more than 100% and frequent shortages of bread, fuel and medicine. The country's currency has also fallen to a record low of 150 Sudanese pounds to the dollar on the black market compared with 55 at the official rate