Monday saw Chancellor Phillip Hammond quizzed by the Treasury Select Committee on Brexit negotiations. Mr Hammond suggested that Britain would seek a transitional deal in order to minimise any negative impact on the economy. However, the Chancellor was criticised by former UKIP leader Nigel Farage for “backsliding” on the deal to leave the EU and by Liberal Democrat leader Tim Farron for a supposed lack of clarity on the issue. On Tuesday, a House of Lords report was released in which peers noted that the Government would be naïve to expect a “free lunch” when negotiating a trade deal with the EU and called for a transitional phase to stop any detrimental impacts on the economy.
After appearing in front of the Commons Brexit Select Committee, Brexit Minister David Davis made it clear that the Government’s plans for Brexit will not be published until February at the earliest. Furthermore, Mr Davis stressed that the option of a transitional deal to minimise disruption was still a possibility. Meanwhile, Wednesday saw the announcement that the European Commission is set to be appointed as the Chief Negotiator with the UK over Brexit. Seen as an important win for Commission President Jean Claude Juncker, the move is seen as an attempt to stop British negotiators from trying to exploit divisions among different members states.
Thursday began with UK Ambassador Sir Ivan Rogers allegedly suggesting to the Prime Minister that negotiating a trade deal with the EU could take up 10 years and still not be successful. This was seen as somewhat at odds with Teresa May’s wishes for a smooth transition for paving the way for Britain to exit the EU. On a lighter note, Mrs May was seen as being left to her own devices as other European leaders greeted each other at the latest EU summit. Mrs May was apparently keen to the stress the importance of an early deal in Brexit negotiations on the status of EU citizens living in the UK and conversely, Britons living in Europe.
Wednesday saw the release of the CPI index results, with inflation rising by 1.2%, an increase from the 0.9% that was posted in October and the highest rate since October 2014. Much of this was attributed to a rise in the cost of clothes and fuel. Furthermore, the Producer Price Index (the price of goods and services bought and sold by UK manufacturers) saw another rise in November, the fifth consecutive increase following two years of falls. A number of commentators expressed the feeling that October’s dip in inflation was increasingly start to look like a one off as opposed to a sustained recovery in the strength of the economy.
In light of the uncertainty caused by Brexit negotiations, the Bank of England took the expected step of keeping interest rates at the same level of 0.25%. The Monetary Policy Committee announced that it still expects inflation to rise in 2017 above the 2% target it set earlier next year, however at a slower pace than initially forecast. The decision to maintain the same rate level was marked in contrast by events in America which saw the Federal Reserve push up interest rates from 0.25% to 0.5%, with certain analysts suggesting that this will exert further downward pressure on the value of the pound. To see more in-depth Chamber comment on both developments click here and here.
Figures released on Wednesday by the Office for National Statistics indicated another strong showing for the region on the jobs front between August and October. While employment decreased nationally by 0.1 per cent, it increased by 0.9 per cent in the West Midlands. Unemployment in the region decreased by 0.9 per cent, despite the national figure remaining at the same level. More information on the Chamber’s response to this news can be found here
As we approach Christmas, the Chambers has been getting into the festive spirit, with our Chief Executive Paul Faulkner attending Christmas drinks at HSBC and RBS. On Thursday, the Chambers held their own Christmas party at the Park Regis Hotel, with staff celebrating a fabulous year for the organisation and looking ahead with excitement to 2017.
Research for our Q4 Quarterly Business Report has also been completed with a view to be published in January. The report offers an up to date snapshot of the performance of the Greater Birmingham business community and is our flagship economic publication. It is the most comprehensive regular report of its kind in the city-region. We will be launching the report at an event hosted by QBR sponsors Birmingham City University on Thursday 19th January. Please click here for more information and to book your place.
As it is the last blogpost of the year, we would like to take the chance to wish you all a Merry Christmas and a Happy New Year.