eco TV Week
Brexit: after the vote   1/18/2019

As widely expected by markets and political commentators, Prime Minister’s May Brexit deal was defeated in parliament last Tuesday. She then survived a no confidence vote and has to present her plan B to parliament on Monday. The challenge is huge.

United States: the increased role of Federal Home Loan Banks   12/21/2018
In the US, the preservation of liquidity ratios has hidden the greater use by banks of financing from Federal Home Loan Banks, which themselves are highly exposed to the risk of maturity transformation.
India: Risky environment   12/7/2018
Since the beginning of the year, risks have increased slightly due to the rise in international oil prices and the US monetary tightening. However, growth prospects are still well oriented and the macroeconomic situation has strengthened compared with 2014.
France: a disturbing drop in consumer confidence   11/30/2018
In France, consumer confidence dropped off sharply in November. This decline reflects the French households concerns regarding their purchasing power, which are exacerbated by the sharp rise in pump prices through October against a backdrop of higher fuel taxes.
The strange debate about central bank independence   11/23/2018
Is central bank independence under threat? The question may seem strange. After all, central bank independence has been instrumental in bringing down inflation and inflation expectations in the 80s and 90s.
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On the Same Theme

Brexit, the cost of uncertainty 1/18/2019
Market reaction suggests that the parliamentary vote, with a wide majority, against the Brexit deal which had been negotiated with Europe, has reduced the likelihood of a no-deal Brexit. Whether this feeling of relief lasts will depend on how the discussions on possible outcomes evolve. The economic headwind which comes with this prolonged uncertainty, for the UK but also for the companies in the EU which trade with the UK, will not go away soon.
Large UK banks could withstand a major shock under certain conditions 12/21/2018
In 2018, the Bank of England (BoE) brought forward the publication of its stress test results so that MPs could have enough time to consider them before voting on the draft Brexit deal, which was initially scheduled to happen on 11 December 2018 . Evaluated banks started the 2018 BoE’s stress test with an aggregate Common Equity Tier 1 (CET1) 3.5 times higher than the level seen before the 2008 crisis according, to BoE estimates. It has been rising constantly since 2014, which means that UK banks have been strengthening their capital positions.  The BoE is satisfied with the 2018 results since each of the seven banks assessed would keep its CET1 capital above the minimum requirement even in the event of a shock deemed to be more severe than the 2008/09 crisis, and sufficiently severe to cover a disorderly Brexit scenario. Based on these results, along with other data, the BoE’s Financial Policy Committee maintained the level of its countercyclical capital buffer for the whole banking system – on top of regulatory prudential requirements – at 1%.  
Remortgaging rises again in the United Kingdom 12/19/2018
Remortgaging is a mechanism allowing creditors to reuse a mortgage initially registered in support of a first loan, usually a real estate loan, in order to take out a new loan. Now banned in France on behalf of individuals, this market represents nearly GBP 104 billion (over a 12-month period) in the United Kingdom according to the latest figures from the Bank of England for the month of October 2018. After fading in 2008, the market is on an upward trend since 2013, but avoids the runaway seen in the early 2000s. The increasing unbinding between volume and value data observable since 2013 can be attributed to the housing price growth (+17% according to ONS between January 2013 and October 2018). Remortgaging now accounts for more than a third of personal loan growth.
Update on Brexit 10/18/2018
On 29 March 2019, the European Union and the United Kingdom will officially separate. Yet the terms of the separation have yet to be worked out. The Withdrawal Agreement, which is indispensable for a smooth exit, calls for a transition period of a little less than two years, through the end of 2020. It will to be discussed at the 18 October European Council meeting. Agreement on the divorce terms has always run up against the Northern Ireland question. Assuming the European heads of state and governments can solve this issue and a deal is finally reached, it would then be up to the UK Parliament to give its consent. This surely poses the greatest threat to a smooth Brexit.
Things are not going well 7/11/2018
Growth suffered from harsh winter weather at the start of the year and may have caught up slightly in the second quarter. However, the UK growth could slow down further because of the prospect of trade conflict with the United States, along with Brexit uncertainties. The UK is still struggling to turn the agreement in principle about the terms of its exit from the European Union into practical legal provisions. In the circumstances, it is very hard to predict exactly when the upcoming rate hike will take place, despite high inflation and a very low unemployment rate.
Difficult times 5/28/2018
The UK is just ten months away from the official date for withdrawing from the European Union, set for 29 March 2019. Political uncertainty remains extremely high: the agreements that have been reached so far are still vague concerning such major issues as the handling of Northern Ireland. Under this environment, it is hard to predict the most likely Brexit scenario. Moreover, as time passes without any concrete progress, it only reduces the probability that an overall agreement will be reached that is satisfactory for all parties. The economy has slowed: growth is sluggish at a time when Sterling has depreciated and inflation is on the rise. This has resulted in a very cautious monetary policy and the postponement of fiscal adjustments.
The Bank of England: cautious yet confident 5/18/2018
Since the referendum the UK economy has been doing rather well and according to the Bank of England little slack is left. Slow and moderate increases in the base rate should allow inflation to converge to the Bank’s objective. However, the decision of the Monetary Policy Committee last week to keep the rate unchanged despite its confidence about the growth outlook reflects the cautious approach of the Bank of England. Brexit remains a source of uncertainty after all.
Brexit: an update 2/16/2018
Since embarking on Brexit, the UK economy has slowed. Although the business climate has stabilised recently, it remains fragile.
Gloomy weather 1/25/2018
Having pointed in the wrong direction last autumn, economic indicators have rebounded slightly since. As we move into 2018, the UK economy is growing only slowly, but has not completely stalled. The fall in the pound has stopped. Is this just a temporary respite? The Brexit process is now moving into its second, and more difficult, phase. This will see the definition of the future framework of relations between the United Kingdom and European Union, with a view to agreement in October 2018 prior to effective withdrawal in March 2019. The main risk is of deadlock; negotiators have very limited time in which to reconcile positions which are still very divergent.

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