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...