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Brexit Bulletin: Carney’s Final Cut?

Brexit Bulletin: Carney’s Final Cut?

Days to Brexit: 18

(Bloomberg) --

What’s Happening? On the day before Brexit, Bank of England Governor Mark Carney will have his own last hurrah. 

With the U.K. on the brink of leaving the European Union, talk is suddenly rising of a possible cut in the U.K.’s key interest rate.

Even though an 11-month transition period after Jan. 31 will mean no immediate regulatory changes, BOE policy makers are increasingly keen to encourage British companies to borrow, invest and hire. Carney could find himself explaining a rate cut at his final press conference on Jan. 30.

Brexit Bulletin: Carney’s Final Cut?

The possible votes for easing have been rising in the past week, with two members of the Bank’s Monetary Policy Committee saying they’re open to it and Carney himself laying out how much scope the bank has for stimulus.

There’s a slew of economic data on the horizon, though for Bloomberg Opinion’s Marcus Ashworth any rate-cut decision will hinge on a crucial purchasing managers survey due on Jan. 24.  That will be “the first proper look” at how the U.K. economy is reacting to Boris Johnson’s election win, he says.

Nevertheless, Ashworth is unconvinced, branding similar recent surveys “poor predictors” of economic prospects. “It would be foolish of the BOE to pin its rates strategy on one set of data, especially so soon after a game-changing election,” he argues.

In the end the decision rests with Carney and the MPC. The governor could yet go out with a bang before handing over the reins to Andrew Bailey in March.

Beyond Brexit

Brexit in Brief

Nothing to Declare | Prime Minister Johnson downplayed concerns in Northern Ireland that his Brexit deal will economically cut off the region from the rest of the U.K. by requiring checks on goods entering from Great Britain. Despite Johnson’s bullish words, some trade experts are not so sure he’s right. The BBC’s Northern Ireland business editor sums up the concerns

Gambling Man | Meanwhile, Irish Prime Minister Leo Varadkar is planning to hold a general election within weeks, betting that a strong Irish economy and the boost of striking a deal on Brexit with the U.K. can help his government win a new mandate. 

Then There Were Five | Rebecca Long-Bailey, Lisa Nandy, Jess Phillips, Emily Thornberry and current front-runner Keir Starmer will vie to succeed Jeremy Corbyn as Labour party leader after securing their places in the next stage of the contest. Results are due on April 4. Here’s our guide to all the candidates.

No Vacancies | U.K. job postings fell by the most in a decade last year as Brexit uncertainty whipsawed business planning, according to accounting and business advisory firm BDO. Vacancies fell by 59,000 in 2019, the most since the 2009 financial crisis, though overall employment levels remained “strong.”

Calm Waters | After last year’s turbulence, pound traders are looking forward to a much calmer 2020, with a gauge of expected swings in the sterling-dollar pair over the next year now at its lowest since mid-2017. Nevertheless, sterling fell on Monday amid more talk of a rate cut, trading at $1.2977 at 4 p.m.

Brexit Bulletin: Carney’s Final Cut?

Festival of Brexit? | The newly appointed director of Festival 2022, a nationwide celebration conceived by former Prime Minister Theresa May, said he hopes to bring the nation together. “On a very basic level, we are probably due a bit of joy and hope and happiness, and art is really good at that,” Martin Green told the Guardian.

Want to keep up with Brexit?

You can follow us @Brexit on Twitter, and listen to Bloomberg Westminster every weekday.

--With assistance from Brian Swint.

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

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