Theresa May, U.K. prime minister, gestures while speaking during the Bank of England’s “Independence - 20 Years On” conference. (Photographer: Simon Dawson/Bloomberg)

May Could Postpone Brexit Vote, Fed Caution, ECB Errors: Eco Day

(Bloomberg) -- Happy Friday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

  • Theresa May is said to be weighing a plan to postpone the crunch vote on her Brexit deal in an attempt to avoid a landslide defeat that would risk a major U.K. political crisis
    • European Union leaders are poised to turn their next summit into a Brexit crisis meeting, just two days after May faces almost certain defeat in Parliament over the divorce deal. But so far, they’re not willing to offer her anything that could shift the parliamentary math
  • Budget breakthrough: Italian Deputy PM Luigi Di Maio is very optimistic on budget talks with European partners as money set aside for the government’s flagship measures was more than needed
  • The European Central Bank’s economic forecasts have had big errors over the past five years, raising doubts on its assessment now as policy makers prepare to cap asset purchases, a Bruegel researcher says
    • The ECB will offer new long-term loans to banks next year while going slow on interest rates to underpin the region’s increasingly fragile upswing, according to a Bloomberg survey of economists.
  • Wait and see: While Wall Street traders are now betting against the Fed raising interest rates in 2019, economists are still debating two, three or four hikes. Meanwhile, two regional Fed presidents urged policy caution amid mounting economic uncertainties and recent volatility in markets
  • Wrong direction: Donald Trump is losing his war on the U.S. trade deficit amid mounting evidence his own tariffs are part of the reason why. The president has used tariffs as one of his most powerful tools for fighting trade wars, but he’s also wielding leverage with another weapon: uncertainty. Reflecting this, IMF chief Christine Lagarde warned against reacting to every twist and turn, saying a U.S.-China deal will take a “long time”
  • Easy again: Interest-rate cuts are back on the table in Asia, with a growing number of analysts this week predicting policy easing from Australia to India as economic growth weakens and inflation pressures ease
  • Casualty: India’s economic growth may become a casualty of the tug-of-war between the government and central bank. Over in Indonesia, the Asian financial crisis’s legacy still lingers over the economy, with one key policy restriction acting as a handbrake on growth
  • Bailouts: People’s Bank of China adviser Ma Jun has probed the economy for triggers of financial turbulence, and proposed measures including direct bailouts of enterprises and bank re-capitalization should a crisis hit
  • It’s U.S. jobs report day, here’s what you need to know

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