Economists stick to Brexit forecasts despite no-deal rhetoric By Reuters

Economists stick to Brexit forecasts despite no-deal rhetoric By Reuters


© Reuters. FILE PHOTO: Small toy figures are seen in front of a Brexit logo in this illustration picture

By Julien Ponthus and Olga Cotaga

LONDON (Reuters) – Economists stuck to their forecasts on Monday that Britain and the European Union would agree some sort of post-Brexit trade deal, taking the view that London is likely toughening its rhetoric in a bid to pressure Brussels into a compromise.

The talks are back in crisis and the pound is bearing the brunt on renewed fears of a disorderly exit from the EU after the British government was reported to be planning legislation to override parts of the Withdrawal Agreement it signed in January.

“Rhetoric in past few days has been ramped up, but we don’t think this materially changes the prospect of a deal being reached before the end of the year”, Chris Graham (NYSE:), Europe Economist at Standard Chartered (OTC:), said.

He added his team was sticking to probabilities of a deal at 50%, no-deal at 30% and an extension of the talks to 20%.

Petr Krpata, Chief EMEA FX and IR Strategist at ING, also stuck to his overall forecast.

“Yes, the latest developments definitely increased the chance of a no-deal Brexit, but still no deal is not our base case,” he said, giving a 50% to 60% probability to a deal.

Economists at Commerzbank (DE:), Rabobank and Nomura also kept their forecasts that a deal was most likely scenario.

While there is an expectation that Prime Minister Boris Johnson will not go as far as to “eliminate the legal force of parts of the withdrawal agreement”, a possibility reported by the Financial Times, economists said they had to take that into account.

“While our base case remains a semi-managed hard exit (60% probability) which involves some modest stop-gap measures to manage the transition from EU to WTO rules for trade, the rising tensions could limit the breadth of any such measures,” said Kallum Pickering, a senior economist at Berenberg.

Moving forward however, the perception could quickly deteriorate if London and Brussels keep up their tug of war.

“It is almost inevitable that the perceived probability of ‘no deal’ will escalate over the coming weeks”, Goldman Sachs (NYSE:) analysts wrote in a research note this morning in which they maintained their expectations of “thin” free trade agreement.

GRAPHIC: Brexit brinkmanship – https://fingfx.thomsonreuters.com/gfx/mkt/ygdvzmedjpw/Pasted%20image%201599486191450.png

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME