October 10, 2018
In recent months there seems to be a growing amount of commentary in the press that the party might be over and a global recession is coming. Whether or not that commentary is correct, the combination of a Trumpian trade war and high debt levels ought to be enough to cause a major economic downturn at some point.
Brexit obviously poses a major risk to the British, European and global economies. With the months ticking down, contingency plans that need to be put in place by major businesses must already be well underway. Whether this is a process that can and will be reversed if the UK chooses to remain or a Norway style deal is struck, who knows…
If Theresa May returns from the Council meeting on 17th October with no deal struck, which seems to be the most likely outcome, then what? The news would be obviously bad for the British pound and UK economy. My fear is that the moment that triggers the next recession could be with us very soon. Parliament is obviously deadlocked on Brexit. Mrs May refuses to discuss a second referendum. The EU, rightly, has no intention of breaking up the four freedoms. This means that the most likely scenario would be that Britain crashes out of the EU accidentally onto the hardest of hard floors in March 2019. With that as a very strong possibility, would global stock and bond markets wait for the UK to actually leave the EU, or would that moment be brought dramatically forwards and a whirlwind of selling be unleashed on the UK economy?
I am very worried that the answer might be: next week.Author : financialguy