Friday 20 April 2018
The gap between wages and inflation has widened in favour of living standards yet again with unemployment dropping further and likely to spiral downwards thanks to a glut of jobs in Brexit Britain. Meanwhile, the pound is up, as is confidence among small businesses. London is back on top as the world’s number one financial centre, an ever-shrinking number of financial jobs expected to be lost to Europe as a result of Brexit, says the deputy governor of the Bank of England. Trade deals with the India and Canada are on.
Yet again, the ONS has reported a rise in earnings and a drift in inflation leading to an overall increase in buying power, and the gap is getting bigger. On a single month basis, wages are up 2.9% – the highest since July 2015 – while inflation dropped to 2.5%. A month ago, Leave.EU’s Economy Update reported a difference of only 1%: 2.8% and 2.7% respectively. The jobless rate is at a 43 year low, 4.2%. Job vacancies remain just shy of a million, meaning this positive trend is likely to continue.
The Pound has reached a new post-referendum high against the dollar of $1.437 – on the eve of the referendum it stood at $1.45. According to Bank New York Mellon, the main reasons for sterling’s comeback is booming optimism over Brexit and an anticipated rise in interest rates.
The latest small business confidence tracker by Bibby Financial Services has discovered a 13% rise in the number of small businesses expecting a rise in sales over the next three months. 50% of all SMEs now expect higher revenues over the coming months compared to the first few months of the year.
Deputy Governor of the Bank of England, Sam Woods has downgraded the number of financial services jobs forecast to be created on the continent as a result of London’s diminished access to EU financial markets. Woods told the Exiting the EU select committee there had been a “slight downward drift” in Brexit impact on jobs, “probably towards the lower end” of a spectrum from 5,000 to 10,000. Woods also struck a note of optimism over the prospects of a financial services deal with the EU. It is “absolutely technically doable…I reject the view you cannot have a deal on financial services,” said Woods, adding that such a deal would not entail Britain having to be a rule taker on financial services.
A survey by advisory firm Duff & Phelps has found that 53% of finance professionals view London as the world’s Pre-eminent financial centre, a whopping jump from last year’s 35%, which placed New York in the number one spot. London stood out for the transparency of its regulators. “Perversely, Brexit has provided the backdrop for showing the importance of London in the global capital markets,” said Duff & Phelps’ global head of regulatory consulting Monique Melis. “London has a tried and tested legal system, very strong service providers and a very strong legal community that understands capital markets.”
At a meeting between Theresa May and Justin Trudeau on Wednesday, the Canadian prime minister assured his British counterpart a new trade deal would be agreed to “flip over the day after Brexit” with the existing arrangement with EU known as CETA acting as the starting point before being built upon. “The day after Brexit, and in the following months, we will work to make sure we are taking advantage (of CETA) and look to enhance and improve it in process that will most likely not take all that long,” said Trudeau, who was in London for the Commonwealth Leaders summit. Theresa May also signed a bilateral commitment towards a free trade deal with Indian prime minister Narendra Modi, although unlike Canada any deal is unlikely to come into effect immediately after the transition period elapses.