UK: Theresa May has called a General Election for June 8 2017. According to the current Prime Minister, a bigger parliamentary majority is needed in order to strengthen her hand for negotiations on Brexit. Sterling climbed to a 4 month high on the back of the news.
UK retail sales had their biggest quarterly fall of 1.4% in 7 years during March 2017 as Brexit starts to take hold. Families are understood to be facing the fastest rise in the cost of living for 3 years and are tightening their belts. Retailer Debenhams are closing 11 warehouses and have 10 stores under review. Marks and Spencers are to close 6 stores.
UK: Potential investment by manufacturers has hit a 6 year low with a significant proportion of them saying they would not be investing in buildings and machinery due to ‘inadequate net returns’. The recent results show that the growth spurt enjoyed due to the fall in the pound has been shortlived with long-term considerations now on the horizon for buildings.
UK: The Purchasing Managers Index (PMI) showed manufacturing expanded at its fastest rate for three years during April. The index came in at 57.3 for April vs 54.2 in March. It is the 9th month in a row that the PMI has showed expansion. However it was uncertain where the growth actually came from as consumer spending has decreased, and business sentiment remains weak. Possibly housing and infrastructure could be a factor towards the growth which are part of the ‘hard-to-measure’ economy.
The EU has raised the Brexit bill to €100bn in a hardline tactic with the UK. This includes post-Brexit farm payments and admin fees to 2020. The previous estimate by Jean Claude Juncker was €60bn and the upsurge reflects a hardening stance from EU members who were requested a revision of the initial calculations. Farm-related payments added a further €10bn - €15bn to the bill.
Greece: Have agreed a deal with creditors which will allow for a minimum of €7.4bn in bailout funds to be released. This will bring the total amount of disbursements from the eurozone to €181bn since 2010. Germany is seeking that the IMF be part of the debt relief programme but does not want to grant a haircut on the debt, which is what the IMF have suggested saying the current debt is ‘unsustainable’. The next meeting of the eurozone finance ministers will take place on May 22.
EU: Several policy-makers have urged the European Central Bank to stick with their economic stimulus programme as the eurozone is close to its best economic performance run in 10 years. Germany however have criticised the ECB seeking them to wind down the stimulus. Core inflation remains low however at 1.5% for March.