Bank of England leaves rates unchanged amid Brexit fiasco
The Bank of England left its interest rate unchanged today at 0.75%, exactly as expected. Given the unrivalled incompetence of the UK Government’s handling of Brexit, it is somewhat encouraging that Sterling remains as high as it does. There is not much common ground between the two sides, but the one thing that they can agree on is that the (twice-rejected) Withdrawal Agreement to which Prime Minister May is so personally committed should be abandoned. The economic concerns surrounding Brexit that were so enthusiastically promoted by the pro-EU lobby have turned out to have no substance at all, and the UK is actually fairly well-placed to succeed provided the financial millstone of the PM’s “Deal” is discarded. With her personal approval rating at its lowest point her removal must come soon, and replacing her with a popular and charismatic leader should be the catalyst for a recovery in the value of Sterling. In fact, her stock has sunk so low that replacing her with anybody would be an improvement. We do not feel that any outcome is likely to lead to any interest rate rises for many months to come, and if anything a rate cut is the more credible outlook for the future.