EU OFFERS BREXIT EXTENSION
In what is fast becoming a real-life soap opera, this week’s episode of Brexit saw the narrative pick up the pace. John Bercrow kicked things off by
quelling Theresa May’s “if it doesn’t work try try again” approach of pushing the same deal through only to get continuously rejected by parliament.
Theresa May then managed to rile up Parliament blaming MP’s for the mess and attempting to win over the public. With three million people signing
the petition to repeal Article 50 and a march planned this Saturday in London, it appears that she has lost both sides of the dressing room.
May then pushed the EU for a short extension to allow her deal through. After a marathon of session talks, the EU handed May another grace period to
come up with an alternative Brexit plan. This could mean Britain will remain an EU member until 22nd May provided the MP’s approve the revised deal,
otherwise a much shorter extension will be offered which lasts until 12th April. While the Prime Minister has been granted breathing space, the control
she had upon proceedings has taken a big hit.
US: FED MAINTAINS RATES
To the surprise of absolutely no one this week, the Federal reserve stuck by its cautious approach leaving interest rates unchanged again this year. While the US economy remains resilient, risks caused by trade tensions, Brexit and slowing global growth have led to officials slashing their projected rate hikes from two to zero this year. Bond yields which were volatile in the run up to the meeting fell post announcement while equities which favour low interest rate environments performed well. A softening dollar also benefits EM currencies with the likes of South African rand and Indian rupee up 1.73 and 0.2 per cent against the dollar.
What is more interesting to hear are the finer details on how the Fed plans to slow down its balance sheet runoff. In May, the Fed will look to lower the cap on monthly redemptions of treasury securities by half from its current $30bn level. It will then look to halt the runoff completely by end of September.
TECH: WORLDPAY ACQUIRED BY FIS FOR £32BN
Worldpay changed owners for the fourth time in a decade this week following a takeover by US firm Fidelity National Information Services (FIS) for £32bn. Worldpay handles more than 40 billion transactions a year, within the UK alone, it accounts for 42 per cent of all card payments. FIS on the other hand only cater to financial services firms, so this acquisition is a diversification play for the company. Shares of Worldpay closed up by 9.31 per cent following the announcement.
By 2024, global digital payments is set to reach $7.6tn. As a result, the fintech sector, which predominately consists of payment processing companies has been scaling up to meet demand. Mergers and Acquisition activity within this space has been accelerating. In the first half of 2018, 141 transactions happened at a total value of around $46bn. In comparison, the full-year figure for 2017 was $32.9bn.
UK: UNEMPLOYMENT RATE FALLS
The national statistics office published its latest UK jobs data which appears to defy gloomy Brexit news. The unemployment rate now stands at 3.9 per cent in the three-month period to January – its lowest rate in over 44 years. However, it must be stressed that these figures are backward looking and stops before the first of Theresa May’s parliamentary defeats. Thus, the next set of unemployment data will be more indicative of how the rate has affected to heightened risk.
Meanwhile, the Scottish economy outpaced the UK as a whole in Q4 last year. GDP expanded by 0.3 per cent in comparison to 0.2 per cent. Growth was predominately fuelled by the construction and services sectors. Comparing last quarter with the same period in 2017, GDP grew by 1.3 per cent equivalent to UK growth.