Miscellaneous Quotes from week to 9th December

Wolfgang Schaeuble – German finance minister  on Bloomberg

No reason to worry about Italy

“I don’t think there is reason to talk about a euro crisis. The Italians have a lot of experience dealing with such situations and that’s why I’m not concerned.”

 

Michel Barnier – the European Commission’s top Brexit negotiator on Business Insider and Reuters

Bloomberg: On Brexit

“Frankly I do not know what a hard or soft Brexit are. I can say what a Brexit is: clear, ordered, and we will work within the council’s guidelines on the content of the negotiation. We want a clear agreement, we want to reach this agreement within the limited time that we have available”

There are time frames

“Time is short. Should the UK notify the European Council by the end of March 2017 … it is safe to say negotiations could start a few weeks later and an Article 50 agreement reached by October 2018…Keep calm and negotiate”


SK Addition:

Donald Trump is happy the stock market is up

“What happens is they’re so unnerved that the stock market is at an all time record since I’ve been elected…after I won the election, you see what happened. In the history of our country, there’s never been an up this big after an election, so I don’t know how somebody says that people are unnerved, it’s just the opposite. And frankly I think we’re going to go up. We have tremendous room, tremendous margin in our country, but we have to do things right.”

Bank of England (BoE) Agents’ summary of business conditions

Intelligence report on businesses and consumer actions post-referendum

(http://www.bankofengland.co.uk/publications/Documents/agentssummary/2016/jul.pdf)

Little to moderate change in annual rate of activity growth

“The annual rate of activity growth had remained moderate and little changed in the month up to the EU referendum. Consumer spending and construction output growth had eased a little, offset by a pickup in manufacturing growth from a low base. There had been further signs of uncertainty leading to delays in decision-taking, including on capital spending, hiring and property investment.”

Businesses weren’t prepared for the Brexit

“Many contacts planned to undertake strategic reviews of their operations over the coming months in light of the vote. For many, the result of the referendum was a shock; few had contingency plans and so for the time being were in a mode of seeking to maintain ‘business as usual’.”

Companies considering location changes and postponing FDIs

“As yet, there were few suggestions of disinvestment, such as exiting the United Kingdom in the near term, but there were a few reports of planned foreign direct inward investment being postponed. A number of companies were considering alternative European locations for aspects of their business, and some contacts within large international firms expected their continental European operations to receive a greater share of future investment than their UK ones.”

A ´risk off´ approach in the near term for firms

“The outlook for investment was uncertain. The majority of firms spoken with did not expect a near-term impact from the referendum result on their capital spending. But around one third expected some negative effects over the next twelve months, with reports of a ‘risk off’ approach to

expenditures and some imminent plans for spending slipping.”

Consumers are hesitant on higher value purchases

“There had been little evidence of any impact on consumer spending on services and non-durable goods, although there were some reports of consumers becoming more hesitant around purchases of higher-value goods.”

Companies expect to reduce hiring activity

“As yet, there had been few reports of major alterations to businesses’ employment intentions. But the vote to leave was expected to have a negative effect overall on hiring activity over the coming twelve months.”

Prices expected to rise but may not be passed to consumers

“Companies’ prices were likely to increase, as the fall in sterling passed through to higher import costs …Given intense competition, retailers reported seeking to minimise increases in consumer prices, with a view to protecting their market share. But in some services, such as catering, there were expectations that prices could rise relatively quickly.”

Lending unaffected, demand for credit easing.

“But the early evidence indicated that banks’ appetite to lend had been maintained following the referendum decision. There were reports that demand for credit was easing alongside lower expectations for investment spending.”