Market developments were dominated by events in the UK last week, where the government published its White Paper for exiting the EU, and suffered two prominent cabinet resignations as a result. The May government was also stung by the visit of US President Donald Trump , where he delivered withering criticism of the government’s Brexit strategy, while England ‘s exit from the World Cup only added to a week of trauma.
Two years on since the Brexit referendum, the compromise deal reached by Theresa’s May government about its planned Brexit negotiations has failed to inspire much confidence. It resulted in the resignation of two prominent cabinet members, the Brexit secretary David Davis and the foreign secretary Boris Johnson, plus a number of junior officials. As a consequence, the final nine months of UK-EU negotiations are likely to be very uncertain, with the government’s survival always in question. Accordingly, the possibility that the talks could ultimately fail is increasing, with the UK potentially leaving the EU next spring without any agreement in place to soften the impact.
Given these developments it was striking how well sterling behaved, even rallying in the aftermath of the government resignations seemingly on the belief that the departure of arch-Brexiteers will make a ‘soft’ Brexit more likely. This appears to be May’s intention, giving the UK what amounts to ‘associate membership’ of the EU’s single market in key areas such as trade in goods and agriculture.
If this is the hope, it is still too early to hold it with a tremendous amount of conviction however. For one thing the EU is quite likely to reject key elements of the government’s White Paper, threatening the apparent unity of the new May cabinet. Indeed any further concessions made to Europe could well spell May’s demise, with a snap general election becoming a distinct possibility. An election might also be seen as hastening a ’soft’ Brexit if the opposition Labour party were to win, but as last year’s surprise election result showed, certainty about the outcome would be by no means guaranteed.
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A stronger dollar and firmer oil prices threaten capital flows to emerging markets
Dollar weakness replaced by dollar strength but how long will it last?
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There is another plausible reason for UK markets being less affected than might have been expected by these latest political developments, which is that for all the pessimism generated about Brexit since the referendum in 2016, the actual economic outturn has not been anything like as bad as feared. The UK Treasury warned before the referendum that a vote to leave the EU would result in ‘an immediate and profound economic shock’ with the UK going into an ‘instant recession’ and with 800,000 jobs likely to be lost within two years. The International Monetary Fund’s Christine Lagarde also famously commented that the outcome of a decision to leave the EU would range from ‘pretty bad to very, very bad’.
The last two years, however, have told an opposite story with steady growth of 1.7 per cent in 2017, and with the unemployment rate plunging to a 43-year low of 4.2 per cent. As a consequence the markets have probably learnt not to pay as much heed to the doomsayers as they did before the referendum. They may even turn out to be right in judging that Brexit will not be as disastrous as many policymakers have predicted. The Bank of England after all quickly reversed the emergency rate cut made in the immediate aftermath of the referendum, and is now poised to raise interest rates again, probably in August in the wake of improving second quarter economic data.
Of course the political dimension is one that could still undercut this benign outlook. While the pound did not collapse last week, its rally was limited and will likely remain so while there is an overhang of political uncertainty. The sterling exchange rate index is now about at the mid-point of its trading range since the 2016 referendum. With Brexit negotiations likely to play out all the way to the April 2019 deadline, this factor should inhibit the pound’s upside, with only a resumption of dollar weakness likely to see it able to gain much ground. But with the rising possibility that the government could fall, the pound’s downside probably remains as the greater risk-reward.
Tim Fox is group chief economist and head of research at Emirates NBD
MATCH INFO
Burnley 0
Man City 3
Raheem Sterling 35', 49'
Ferran Torres 65'
more from Janine di Giovanni
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SPECS
Engine: Two-litre four-cylinder turbo
Power: 235hp
Torque: 350Nm
Transmission: Nine-speed automatic
Price: From Dh167,500 ($45,000)
On sale: Now
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
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Indoor cricket World Cup:
Insportz, Dubai, September 16-23
UAE fixtures:
Men
Saturday, September 16 – 1.45pm, v New Zealand
Sunday, September 17 – 10.30am, v Australia; 3.45pm, v South Africa
Monday, September 18 – 2pm, v England; 7.15pm, v India
Tuesday, September 19 – 12.15pm, v Singapore; 5.30pm, v Sri Lanka
Thursday, September 21 – 2pm v Malaysia
Friday, September 22 – 3.30pm, semi-final
Saturday, September 23 – 3pm, grand final
Women
Saturday, September 16 – 5.15pm, v Australia
Sunday, September 17 – 2pm, v South Africa; 7.15pm, v New Zealand
Monday, September 18 – 5.30pm, v England
Tuesday, September 19 – 10.30am, v New Zealand; 3.45pm, v South Africa
Thursday, September 21 – 12.15pm, v Australia
Friday, September 22 – 1.30pm, semi-final
Saturday, September 23 – 1pm, grand final
MATCH INFO
What: 2006 World Cup quarter-final
When: July 1
Where: Gelsenkirchen Stadium, Gelsenkirchen, Germany
Result:
England 0 Portugal 0
(Portugal win 3-1 on penalties)
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
MATCH INFO
Uefa Champions League semi-final, first leg
Barcelona v Liverpool, Wednesday, 11pm (UAE).
Second leg
Liverpool v Barcelona, Tuesday, May 7, 11pm
Games on BeIN Sports
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%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EWilliam%20Friedkin%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EKiefer%20Sutherland%2C%20Jason%20Clarke%2C%20Jake%20Lacy%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3%2F5%3C%2Fp%3E%0A
SERIE A FIXTURES
Saturday (All UAE kick-off times)
Cagliari v AC Milan (6pm)
Lazio v Napoli (9pm)
Inter Milan v Atalanta (11.45pm)
Sunday
Udinese v Sassuolo (3.30pm)
Sampdoria v Brescia (6pm)
Fiorentina v SPAL (6pm)
Torino v Bologna (6pm)
Verona v Genoa (9pm)
Roma V Juventus (11.45pm)
Parma v Lecce (11.45pm)
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
The specs: 2019 Audi A7 Sportback
Price, base: Dh315,000
Engine: 3.0-litre V6
Transmission: Seven-speed automatic
Power: 335hp @ 5,000rpm
Torque: 500Nm @ 1,370rpm
Fuel economy 5.9L / 100km
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Oppenheimer
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WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
The Pope's itinerary
Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport
Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial
Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport
