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Macro Digest: The UK General Election finally agreed, Brexit not so much

Macro
Picture of Steen Jakobsen
Steen Jakobsen

Chief Investment Officer

Summary:  Labour leader Corbyn today "caved" in and will vote for motion to call General Election tonight.

When: December 9, 10 or 11th. 

Background: PM Johnson has been unable to sell his Brexit deal, now he is seeking a new mandate through a General Election.

Macro Impact: More time will pass before we get back to the issue Brexit – EU has granted a delay until January 31st. PM Johnson wants clear political mandate and the polls right now support him.

Market Impact: Market reaction muted – FTSE selling off slightly, while GBP came in bid post announcement breaking. (see charts below)

Conclusion: It increases chances of Brexit being passed by January 31st, but... it comes at the worst price – continued pause in real economic agenda’s in Europe and in the UK. UK credit-impulse will drag down UK growth through end of Q1-2020 setting up major expansionary policy from “newly elected PM Johnson” in 2020. Will UK be first in using MMT? We think so...
 
SJN_29_1
Source: The Sun Newspaper

The latest POLLS in the UK: https://www.politico.eu/europe-poll-of-polls/united-kingdom/

Conservatives @ 37%
Labour @ 24%
Lib. Dems @ 17%

We think that the end result will be a higher POLL for Liberal Democrats due to their clear stance on BREXIT, but more to come as election is called...

SJN_29_2
Source: https://www.politico.eu/europe-poll-of-polls/united-kingdom/

Hourly GBP:

SJN_29_3
Source: Saxo Bank
Hourly FTSE CFD:
SJN_29_4
Source: Saxo Bank

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