Brexit Bulletin: Carney Holds Tight

Days to Brexit: 1

(Bloomberg) --

What’s Happening? Mark Carney gave one last gloomy assessment of the U.K.’s future outside the European Union.

One the eve of Brexit, the Bank of England opted to leave interest rates on hold at 0.75% — defying some market speculation that a cut was on the cards. Justifying their decision, officials said surveys of business activity had picked up since Prime Minister Boris Johnson’s election victory.

Still, the outlook wasn’t all rosy. Governor Carney said the response to the election had been less “so far, so good,” and more “so far, good enough.” In his view the economy could still need a lift if the so-called “Boris bounce” fails to translate into real growth. The BOE also cut GDP forecasts across the board, and said that the “speed limit” of growth had slowed, partly as a result of Brexit.

The bank’s projections are based on “an immediate but orderly move” to a new “deep free trade agreement” with the EU at the end of the year, Carney noted at his final rate-decision press conference before leaving the bank. The quest to secure such an agreement will shape the next 11 months, with tough negotiations due to start in earnest in March. In Frankfurt, the European Central Bank insisted it’s ready for Brexit and is ready for all contingencies.

Nevertheless, the BOE’s 7-2 vote to hold rates was more definite that expected, with investors predicting a 50% chance of a cut heading into the meeting. That meant the pound, which started rising seconds before the decision was announced, continued to climb throughout the day, reaching its strongest level this week.

With economics out of the way, the stage is set for Brexit day itself: No Big Ben bongs, but a light show in Downing Street and a nationwide address by Johnson.

Editor’s Note: Tomorrow’s Brexit Bulletin will be our final edition. After some 820 emails, it’s time for a change in the way we chronicle this story. We’re very grateful that you’ve stuck with us, and we’re not going away: We’ll be back in touch soon with news of what comes next. 

Meanwhile, our global trade newsletter Terms of Trade will follow the next phase of negotiations. You can sign up here.

Beyond Brexit

• A cruise ship carrying 7,000 people was held at an Italian port over fears of a possible coronavirus case.
• In the age of the coronavirus, the signs are going up: Chinese are no longer welcome.
• Moving to the EU be harder after Brexit. For $500,000 and 90 days, Uruguay might have an offer for you.

Brexit in Brief

No Time to Party | Few of Brexit’s biggest backers plan to celebrate too much tomorrow night. “I think you really want to celebrate in a year’s time when you know the terms upon which we have left,” said hedge fund manager Crispin Odey. Even JD Wetherspoons founder Tim Martin isn’t planning an especially boozy Friday. Nigel Farage, meanwhile, warmed up for the big day by unveiling a portrait of himself as “Mr Brexit.”

The Irish Problem | The EU’s trade commissioner, Irishman Phil Hogan, told broadcaster RTE something similar, warning that the toughest part of the Brexit negotiations is still to come. His remarks angered the opposition Fianna Fail party, whose leader told him to “stay out” of domestic politics.

Chicken Run | The U.S. farm chief lashed out at U.K. Environment Secretary Theresa Villiers for her defense of Britain’s ban on “chlorinated” chicken, calling her view “short-sighted.” The comment highlights the barriers to a U.S.-U.K. free-trade accord after Brexit.

Speed Bump | British automakers warned that the sector needs to avoid tariffs and quotas after Brexit to reignite investment and halt a slide in production. Separately Jaguar Land Rover CEO Ralf Speth will step down after a decade at the helm.

Why It Happened | The story of Brexit does not begin or end at 11 p.m. tomorrow, Tom McTague writes for The Atlantic. It “started decades ago and will likely last decades longer,” he writes.

Why It Won’t Stop | Brexit represents the triumph of one Conservative prime minister — and the trashing of the legacy of another, Bloomberg’s Robert Hutton writes. Nevertheless, if the past is any guide, leaving the EU won’t be the end of Johnson’s Europe problem.

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To contact the editor responsible for this story: Chris Kay at ckay5@bloomberg.net

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