Brexit

UK set to take hard line on EU trade under David Frost

The Brexit debate has always been about politics, not economics.  So it was no surprise that December’s UK-EU Trade & Cooperation Agreement (TCA) was the first trade deal in history to actually increase barriers rather than reduce them. The reason is that Brexiters are focused on a very narrow concept of “sovereignty”. And last week’s

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Buyers scramble for product as global supply chains breakdown

Asian LNG prices reached $32.50/MMBTU this month, up from less than $2/MMBTU in June. The Shanghai Containerised Freight Index hit $8000/TEU container (Twenty-foot Equivalent Unit), up from prior rates of $1500/TEU. In Europe, UK supermarkets have warned of containing food shortages in N Ireland due to the new Brexit trading rules. None of this would

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Businesses face “biggest imposition of red tape in 50 years” as Brexit begins

Most companies had closed when the new EU-UK Trade and Cooperation Agreement (TCA) was finally announced on Christmas Eve. And they are only now starting to get their heads around what it all means. Essentially, it creates the biggest shake-up to the UK’s trading relationships since 1973.  As the BBC’s Economics Editor reported: “It is

Your A to Z Guide to the reality of Brexit after 31 December

(Picture credit Shutterstock) A.  Article 50 of the Lisbon Treaty set out the rules for leaving the European Union. As with most negotiations, it assumed the leaving country would present its proposals for the post-withdrawal period – which would then be finalised with the other members. But the UK government has little experience of trade negotiations, as these

Chemicals in the eye of the storm as UK heads for a WTO Brexit on 1 January

On Friday, the UK premier confirmed what many of us have expected for a long time. There is unlikely to be a trade deal with the EU27 when the UK leaves at the end of December: “We should get ready for 1 January with arrangements that are more like Australia’s – based on simple principles

Reality dawns for business as No Deal Brexit approaches

I warned before the June 2016 Brexit referendum that Brexit was all about politics, and Boris Johnson’s bid to become prime minister: “All the evidence suggests that his real motive for deciding to lead the Leave campaign was that – win or lose – this would make him the likely successor to David Cameron as

Merkel warns of need to prepare for No Deal Brexit

Most people missed the fact that last Tuesday was the last possible date to delay the UK’s exit from the EU at the end of the year.  Yet as Germany’s leader, Angela Merkel warned on Wednesday: “To put it mildly, progress in the negotiations has been very limited. I will continue to press for a good

Your A to Z Guide to the Brexit trade negotiations

A. Article 50 of the Lisbon Treaty set out the rules for leaving the European Union. As with most negotiations, it assumed the leaving country would present its proposals for the post-withdrawal period – which would then be finalised with the other members. The UK government, however, has still not yet set out its post-Brexit

Contingency planning is essential in 2020 as “synchronised slowdown” continues

The IMF has now confirmed that the world economy has moved into the synchronised slowdown that I forecast here a year ago. Its analysis also confirms the importance of the issues highlighted then, including “rising trade barriers and increasing geopolitical tensions”, a sharp decline in manufacturing, contraction in the auto industry and structural forces such

Boris Johnson will have to disappoint someone in 2020 as the UK finally leaves the EU

Finally, after three and a half years, the UK has reached “the end of the beginning” with Brexit, in Winston Churchill’s famous phrase. Since the referendum, its leaders have consistently refused to confront the real choices that have to be made over what type of Brexit it wants to have: In June 2016, then premier

What’s next for Brexit and chemicals?

The UK is about to go to the polls again to try and decide the Brexit issue.  Chemicals will be one of the industries most affected by the decision, as it depends on cross-border supply chains.  As the UK Chemical Industries Association has warned: “The chemical industry in the UK and in Europe needs a

UK election offers voters no middle ground in December

Pity the poor UK voters as they prepare to vote in probably the most critical election of their lives. As they battle the wind and rain to vote in the first December election for 100 years, they already know there are only 3 likely outcomes: Tory majority, Brexit by end-January, EU trade deal uncertain Labour

No Deal Brexit still a likely option if opposition parties fail to support a new referendum

Canada’s normally pro-UK ‘Globe and Mail’ summed up the prevailing external view of Brexit last week: “We begin this editorial with an apology to you, our faithful readers. In March, we described the Brexit situation, then careening through its third year and nowhere close to resolution, as an “omnishambles. “An omnishambles is a state of

BASF prepares its UK supply chain for Brexit

BASF has been working with Ready for Brexit (the online platform I co-founded last year) as part of its programme to prepare its UK supply chain for Brexit.  Here, Ready for Brexit’s editor, Anna Tobin,  reports on the workshops that BASF has been running this month for SMEs. The world’s largest chemical business, BASF, has

The BoE’s pre-emptive strike is not without risk

The Financial Times has kindly printed my letter below, arguing that it seems the default answer to almost any economic question has now become “more stimulus” from the central bank. After 15 years of subprime lending and then quantitative easing, last week’s warning from the Bank of England suggests there are fewer and fewer economic

No Deal Brexit remains UK law unless MPs reverse their previous votes

“That couldn’t happen” are probably the 3 most dangerous words in the English language. They mean “I don’t want to think about something that might be painful“. So if you hear MPs saying a “No Deal Brexit can’t happen“, ignore them. They are wrong. ‘NO DEAL’ BREXIT IS THE LAW OF THE LAND The issue

Brexit moves from ‘Snakes and Ladders’ to cricket

The Brexit debate had appeared to be a simple game of Snakes & Ladders till now.  The Leave campaign landed on the ladders that led to its goal of No Deal, whilst the throw of the dice left Remain on the snakes, tumbling down towards irrelevance. Yet today, at the very last minute, there are

Your ‘A-Z Guide’ to the Brexit Negotiations

“The UK is now facing a national crisis”, according to Margaret Thatcher’s former Defence Secretary, Michael Portillo, speaking to a dinner in London on Thursday night.  Brexit continues to tear the UK apart, and places the economy at greater and greater risk. On Thursday, premier Theresa May had unveiled her draft Withdrawal Agreement with the

“What could possibly go wrong?”

I well remember the questions a year ago, after I published my annual Budget Outlook, ‘Budgeting for the Great Unknown in 2018 – 2020‘.  Many readers found it difficult to believe that global interest rates could rise significantly, or that China’s economy would slow and that protectionism would rise under the influence of Populist politicians. […]

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Petrochemicals must face up to multiple challenges

Europe’s petrochemical sector must prepare now for the trade war, US start-ups, Brexit and the circular economy, as I discuss in this interview with Will Beacham of ICIS news  at the European Petrochemical Association Conference. With higher tariff barriers going up between the US and China, the market in Europe is likely to experience an influx of […]

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Is your business Ready for Brexit?

Time is running out for the UK government to agree a Brexit deal with Europe.  As my new analysis for ICIS Chemical Business highlights, companies need to move quickly to prepare for the “No Deal” scenario Legendary England footballer Gary Lineker best summarised the general sense of disbelief over the state of 
the Brexit negotiations when […]

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Political and economic risks rise as US mid-term elections near

This is the Labor Day weekend in the USA – the traditional start of the mid-term election campaign.  And just as in September 2016, the Real Clear Politics poll shows that most voters feel their country is going in the wrong direction.  The demographic influences that I highlighted then are also becoming ever-more important with time: […]

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UK faces ‘make or break summer’ as ‘No Deal’ Brexit risk rises

Last week, the UK’s Foreign Secretary, its chief Brexit negotiator and several junior ministers, resigned.  President Trump gave an interview attacking the UK prime minister, Theresa May, and suggesting her policies would “kill” any future trade deal with the US.  And the EU 27’s main negotiator on the critical Brexit issue, Michel Barnier, warned: “On both […]

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Airbus warns of “dawning reality” there may be no Brexit deal

Suddenly, businesses across Europe are waking up to the realisation that the UK is currently on course to leave the European Union (EU) on 29 March next year, without a deal on trade and customs.  As Katherine Bennett, the UK boss of aerospace giant, Airbus, warned on Friday: “This is not project fear, this is […]

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US PE exports on front line as Trump changes trade policies

It is almost a year since Donald Trump became President.  And whilst he has not followed through on many of his promises, he has indeed introduced the major policy changes that I began to discuss in September 2015, when I first suggested he could win the election and that the Republicans could control Congress: “In the […]

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The return of volatility is the key market risk for 2018

We are living in a strange world. As in 2007 – 2008, financial news continues to be euphoric, yet the general news is increasingly gloomy. As Nobel Prizewinner Richard Thaler, has warned, “We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping.” Both views […]

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Budgeting for the Great Unknown in 2018 – 2020

“There isn’t anybody who knows what is going to happen in the next 12 months.  We’ve never been here before.  Things are out of control.  I have never seen a situation like it.“ This comment from former UK Finance Minister, Ken Clarke, aptly summarises the uncertainty facing companies, investors and individuals as we look ahead […]

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The Great Reckoning for policymakers’ failures has begun

Next week, I will publish my annual Budget Outlook, covering the 2018-2020 period. The aim, as always, will be to challenge conventional wisdom when this seems to be heading in the wrong direction.  Before publishing the new Outlook each year, I always like to review my previous forecast. Past performance may not be a perfect […]

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Brexit disaster looms as UK government power struggle erupts

UK voters were never very bothered about membership of the European Union (EU) before the Brexit vote last year.  Opinion polls instead showed they shared the general feeling of voters everywhere – that their country was heading in the wrong direction, and it was time for a change.  Now, last week’s Conservative Party conference showed […]

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Supply chains to shift from global to local

We are living in an ever more uncertain world, where “business as usual” is becoming the least likely option for the future. Companies and investors need to adapt quickly to this new normal environment, if they want to maintain revenue and profit growth. One example comes from the American company 3M, which has become legendary […]

UK risks “crashing out” of EU after election without trade deal

Yesterday, senior EU negotiators warned that “the chances of Britain crashing out of the EU without a new (trade) deal were now “over 50%””.  Clearly, therefore, the UK’s preparations are not going well. Instead of building trust, the UK’s Brexit Secretary, David Davis, seems to think that threats – such as promising “the row of […]

London house prices face perfect storm as Brexit risks rise

The UK goes to the polls on 8 June in a surprise General Election.  And premier Theresa May has clearly decided to base her campaign on a ”Who governs Britain?” platform, as she highlighted when launching her campaign last week: “Britain’s negotiating position in Europe has been misrepresented in the continental press, the European Commission’s stance […]

UK consumers face difficult times as Brexit unwinds the housing bubble, and financial services de-cluster out of London

Brexit negotiations are likely to prove a very uncomfortable ride for UK consumers as Russell Napier of Eric, the online research platform, warned last week: □  ”Public sector debt remains at near-historic highs (in peace time!) and for the first time this public sector debt comes with a private sector bubble □  Credit card debt […]

Brexit letter means end of “business as usual” for the UK

The UK economy set off into the Great Unknown on Wednesday, when premier Theresa May officially notified the European Union of the UK’s intention to leave (Brexit) by the end of March 2019.  In response, the EU released its draft guidelines for the negotiations:    “The first phase of the negotiations should aim to […]

Global supply chains at risk as trade war threat rises

“May God bless the USA and God bless Boeing” was President Trump’s sign-off in his speech on Friday at Boeing’s South Carolina factory.  Earlier he had told the workforce building the 787 Dreamliner: “This is our mantra: Buy American and hire America. We want products made in America, made by American hands. Our goal as a […]

“Business as usual” the least likely outcome for Europe

Europe is heading in to the Great Unknown, as Monday’s post highlighted.  The UK, The Netherlands and France are not the only political uncertainties that we face.  Elections are also due in Italy and in Germany.    Italian elections. After premier Renzi’s referendum defeat last year, it seems like that Italy will hold elections this year, […]

The global economy’s best leading indicator forecasts a downturn

If you want to know what is happening to the global economy, the chemical industry will provide the answers. It has an excellent correlation with IMF data, and also benefits from the fact it has no “political bias”.  It simply tells us what is happening in real-time in the world’s 3rd largest industry.  The chart […]

The blog in 2016

2016 saw the Great Reckoning for the failure of stimulus policies begin to impact companies and markets. The blog’s readership has increased significantly as a a result, as shown in the chart above, with its visits now totaling nearly 500k.  Its readership includes 197 countries and over 11k cities.  Readers also remain very loyal, with […]

2016′s Word of the Year: “Impossible”

Nobody likes change, particularly on the scale that is taking place all around us today.  Understandably, we prefer to live in a state of Denial.  This is why “Impossible” is my Word of the Year for 2016. The main feature of the word is that it is a statement, and a very clear statement.  People […]

Political risk rises as voters feel only the populists are listening

This week, the new UK premier, Theresa May, highlighted how the central banks have encouraged the populists’ rise: “We have to acknowledge some of the bad side-effects. People with assets have got richer, people without have not.” The problem, of course, goes wider than this.  The continuing failure to recover from the 2008 Financial Crisis […]

If “Brexit means Brexit”, what does Brexit mean?

The summer is over, and the UK government now has the job of deciding its objectives for the Brexit negotiations. These, like all major negotiations, will no doubt be long and difficult.  They will also inevitably create major uncertainty for companies, investors and individuals as they progress. I have personally led major negotiations in a […]

UK’s Brexit vote may lead to end of schoolboy politics

Until recently, the job description for a UK (and most Western) politician has been fairly simple – look good on television, and only say something when it has been approved by a focus group.  The reward was the ability to jet off to important sounding meetings of the G7 and G20, and have agreeable dinners […]

Brexit a disaster for the UK, Europe and the world

First, the good news.  It has long been recognised that the UK economy is over-dependent on financial services, and that its housing market – particularly in London – is wildly over-priced in relation to earnings.  The Brexit vote should ensure that both these problems are solved: Many banks and financial institutions are already planning to […]

Brexit debate obscures key issues as assertions replace facts

The UK’s Brexit referendum is fast becoming a bitter battle for the Conservative Party leadership.  It is hard to believe that Boris Johnson, who leads the Leave campaign, really cares either way about the issue of leaving Europe: He told Germany’s Der Spiegel only last year:  ‘We can’t leave Europe. We’re part of the European Continent. What […]

US GDP Q1 forecast at just 0.1%; global chemical output slows

“Confusion now hath made his masterpiece”.  This quotation from Shakespeare’s great tragedy, Macbeth, aptly sums up the state of the world economy. Policymakers refuse to accept that the BabyBoomer-led economic SuperCycle is over.  And so they continue to believe that adding vast amounts of electronic money to the financial system will return the economy to SuperCycle levels […]

Brexit vote will hit UK, Eurozone and global economies

Slowly, but surely, a UK vote to leave the European Union is becoming more likely.  In any referendum, the Yes campaign (in this case called Remain) have to argue a positive case.  But  this is not happening in the UK – and the vote is less than 3 months away.  Unsurprisingly, therefore, as the poll […]

Brexit poll creates UK, euro interest rate rise risk

Financial markets are very bad at evaluating political risk.  They assume people will always be rational, and expect a ‘business as usual’ scenario to continue.  But as we all know, people are not always rational.  And emotion, as today over immigration may cloud their judgement. This week has seen the first signs of this complacency […]