Caspian Energy Journal Caspian European Club
Thursday, 17 January 2019 15:00

Brexit deal defeat heightens uncertainty, Fitch

Brexit deal defeat heightens uncertainty, Fitch

The UK government's defeat over the EU withdrawal agreement heightens uncertainty over the eventual outcome of Brexit, Caspian Energy News ( reports with reference to Fitch Ratings.

Downside risks of a disruptive exit are reflected in the Negative Outlook on the UK's 'AA' sovereign rating.

The government had been widely predicted to lose Tuesday's parliamentary vote, but the scale of the defeat (by 230 votes) underscores the challenge of securing a majority in parliament behind any withdrawal agreement, and ultimately determining a model for future relations with the EU.

The outlook for the UK economy is highly sensitive to Brexit developments in the next few weeks. The UK economy looks to have slowed in 4Q18, as Fitch expected in its December 2018 Global Economic Outlook (GEO). The Office for National Statistics' monthly GDP measure grew 0.3% in the three months to November (compared to the previous three months), down from 0.6% in 3Q18 and broadly in line with the December GEO estimate of 0.2% growth in 4Q18. In addition to the unwinding of temporary factors that likely boosted 3Q18 growth, this partly reflects the downturn in global manufacturing and trade.

But the impact of Brexit uncertainty has also become more evident with business investment falling for three consecutive quarters through 3Q18 and the CBI survey of manufacturer's investment intentions falling to its lowest level since 2009. Retail sales data also point to weak consumer spending growth in December.

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Person in charge of the newsline: Olga Nagiyeva 

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