In World Economy News 11/07/2017
U.K. companies are overwhelmingly opposed to Britain walking away from talks to leave the European Union without a deal, a survey by the British Chambers of Commerce shows.
More than a third of businesses want the U.K. to stay in the EU single market and customs union, according to the poll of 2,400 firms published Monday. Almost 30 percent said a new comprehensive agreement would be best, while only 2 percent said that no deal, or a reversion to World Trade Organization rules, would be an acceptable objective.
“There is near-universal consensus that a deep and comprehensive agreement is needed,” said Adam Marshall, BCC director general. “‘No deal’ isn’t seen as a viable option.”
EU Chief Negotiator Michel Barnier said last week that Britain needs to do more to build trust if a deal is to be put in place before the two-year deadline expires. The BCC poll also showed that most companies would like a transitional arrangement before formal divorce takes place.
The Brexit negotiations are casting a shadow over the economic outlook as consumption, the driver of growth since the referendum last year, starts to weaken. A separate report by IHS Markit and Visa showed consumer spending fell an annual 0.3 percent in the three months through June, the worst quarter since 2013. The decline was led by transport and communication. Recreation and culture spending posted its first monthly slide in almost four years.
The report underscores the challenge facing the British economy as the weak pound pushes up prices while wage growth remains subdued. Bank of England Governor Mark Carney has said policy makers will debate interest-rate increases in the next few months to keep inflation under control, even though higher borrowing costs would be an additional burden on indebted consumers.
“Households are facing an increasingly challenging scenario of rising living costs and weaker wage growth,” Annabel Fiddes, an economist at IHS Markit, said in a statement accompanying the report. “The downbeat data may add to calls for the Bank of England to keep interest rates lower for longer.”
Source: Bloomberg
