Today, the British currency received another blow: data on GDP growth and industrial production were in the "red zone", showing a significant slowdown. Almost three years of uncertainty affect the country's main macroeconomic indicators, and this fact is increasingly reminiscent of itself. Against the background of such trends, the negative news on Brexit is severely felt by traders. Unfortunately, the latest news regarding the prospects of the "divorce process" are extremely negative and alarming.
Thus, the growth of the British economy slowed down: official figures released today confirmed the fears of many experts and analysts. On a quarterly basis, the indicator fell to 0.2% (after rising to 0.6% in the third quarter of 2018), and in annual terms – to 1.3% after rising to 1.6%. On a monthly basis, there was a similar picture - the GDP fell to a negative area in December (for the first time since February last year), reaching -0.4%. In other words, after temporary growth, the British economy slowed again, contrary to certain expectations of economists.
Some structural parameters of the published release even set an anti-record. Thus, the indicator of business investment has been falling for four consecutive quarters (that is, throughout the past year). This stable trend has not been seen for almost 20 years - to be more precise, since 1992. On the other hand, such dynamics is quite understandable, because Britain has been living in the mode of uncertainty for the third year, and among the possible scenarios (and the most real) is the chaotic exit of the country from the EU. It is obvious that such fundamental conditions for such a long time spoiled the investment climate in the country, and the published figures only reflected this fact.
The data on the volume of industrial production in Britain were also very disappointing. Let me remind you that in August last year, this figure (on a monthly basis) fell to zero: in September, it came out at the same level, and in October it collapsed into a negative area, where it can not get out until now. Today, experts expected a positive trend (up to 0.1%), but their forecasts did not come true: the indicator not only remained in the negative zone, but also showed the most negative dynamics since April last year.
The weakest link of the release was the manufacturing sector - it fell immediately to -0.7%. On a monthly basis, this is the strongest decline since January last year. Overall, the decline in production was recorded in nine of the twelve sectors. Especially strongly here stands out (in a negative sense) the production of pharmaceuticals – the figure fell to -5%.
Almost all experts unanimously blame Brexit for everything that happens. The date that is March 29 is inexorably approaching, while London and Brussels are still at opposite poles of opinion. Just last weekend, Theresa May rejected a scenario that could bring the situation out of the impasse.
Let me remind you that the Europeans "strongly recommended" to listen to Labour leader Jeremy Corbyn, who proposed to preserve Britain within the framework of the Customs Union with the EU. In this case, he assured the prime minister that Labour would ensure a positive vote on the draft deal, thereby compensating for the lack of votes among Conservatives. In other words, Brussels supported the idea of Labour, who in turn were ready to put an end to the long-term epic of the negotiation process.
However, Theresa May criticized the initiative "to the nines". On Sunday, she published an open letter, where she rejected the proposed idea in a rather harsh manner. In particular, she said that Britain should be able to enter into its own trade deals, and Labour only offers to participate in the trade policy of the European Union, giving London a "supporting role".
In other words, the next hopes of the supporters of a" soft " Brexit collapsed: the situation remains in limbo. According to spokesperson Theresa May, she will make a statement in Parliament tomorrow about the future prospects in this matter. It is not known what the prime minister will talk about. But, according to some experts, tomorrow, May will "put out a feeler" regarding the transfer of the Brexit date. And although previously she categorically rejected this option, she seems to have no other choice.
Brussels showed its principles and did not agree to provide London with legal guarantees regarding the operation of the backstop regime. May, in turn, refused to go on about the Europeans, rejecting the idea of Labour. The situation has reached an impasse again, but at the same time no one is interested in a hard" Brexit, so the postponement of the Brexit date, in my opinion, is the most likely scenario. If these experts' forecasts come true, the pound will receive strong support, as in this case the probability of chaotic Brexit will decrease again.