There are 192 days until the deadline for the UK to strike a deal with the EU and despite yesterday’s report from the Financial Times that the deal is 80% completed, there are still key areas to iron out within the 6 months that remain. Brexit Secretary, Dominic Raab, spoke more positively yesterday, saying the UK had already made many compromises in order to get a deal done but he did highlight the largest sticking point that remains unresolved – the Irish border. He mentioned the EU had not come up with any alternatives for the border but is this the EU’s headache? I’m not so sure. Whilst progress seems to be slow but still moving, there needs to be a breakthrough soon before May’s government face their biggest threat – the Brexiteers in UK parliament.
In other Brexit news, the IMF chief, Christine Lagarde, warned of ‘dire consequences’ if the UK has a disorderly exit from the bloc. She went onto say ‘it would inevitably have consequences in terms of reduced growth, an increase in the deficit and a depreciation of the currency’. It’s clear that any economic group or think tank is recent months have all said there will be consequences for the UK, small or large, but the UK will ultimately decide by how much.
In China, the government has vowed to hit back at Trump’s tariffs, saying that his decision to tax over 50% of all Chinese exports into America had undermined the efforts of reaching a settlement and this will spark a retaliation. Trump protectionist’s policies are forecast to hurt the US and not just China and should the US eventually tax all Chinese exports, this would cause a 1% shrink in US GDP. China has already said they will strike back, however as and when they choose to could be very costly for President Trump. If they choose to bring in the retaliatory tariffs just before the mid-term elections, then this could either swing voters closer to Trump and the protectionist movement, or vote against him and realising how damaging tariffs could potentially be with no side coming out on top.