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The Markets
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The Markets
by Proactive
Proactive UK has moved.
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Brexit Watch - Single market at core and Apple mentioned

A look at some topics from the Brexit debate in the news this week

Another week and another bonanza of Brexit news to mull over. Even the biggest, and arguably, most powerful company in the world got a mention.

Apple's (NASDAQ:AAPL) eagerly awaited iPhone 7 and 7 Plus handsets will cost punters in the UK up to £100 more than previous models as a result of Brexit.

Why? Apple trades in the US dollar and the hike is a move to offset the weaker UK pound brought on by the leave vote on July 23, said some commentators.

As if young people (so they say) weren't disillusioned enough about the vote to take the UK out of Europe, this could really swing public opinion - not that all fans of the tech giant are young of course.

Lawyers cleaning up

One group probably less worried about rising expenses and the weight of their wallets is lawyers, always to be found in times of disarray, and who are making hay while the sun don't shine.

Whitehall's new Brexit department has reportedly spent more than a quarter of a million pounds on legal advice in the last two months, with the legal eagles pocketing a dizzying £33,000 a week to look into the implications of an EU withdrawal.

A load of 'waffle'

The Minister responsible for Brexit - veteran MP David Davis was accused this week of talking waffle in the Commons about the government's plans to leave the EU.

His two hour speech was big on rhetoric and familiar phrases but short on detail, Labour claimed, and a big theme this week again was - the continuing confusion and lack of clarity on what will actually happen when Article 50 is triggered.

There has been some effort to be ultra clear however - Prime Minister Theresa May says there will be no vote in Parliament or a second referendum.

There will be no 'running commentary' on Brexit plans, she added.

Not surprising then perhaps that there have been accusations of the government "making it up" as they go along.

The question of whether the UK remains in the single market remains a big sticking point, as European leaders have made clear that single market inclusion means accepting free movement of workers across Europe.

This point was amplified this week by a call from Japan in a report from its Foreign Ministry urging the UK to remain in the single market.

"Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to Continental Europe if EU laws cease to be applicable in the UK after its withdrawal," said the document.

Japan is pushing for what is termed a "soft" Brexit for Britain, which will avoid customs controls on exports, allow London banks to trade across Europe and let employers freely hire EU nationals.

But the economy's fine, right?

There was again some encouraging UK data this week, following on the heels of other positive numbers, like in retail, and now service sector PMI on Monday beat expectations.

The sector is key as it accounts for 80% of annual economic output in Britain and it rose to 52.9 in August, from 47.4 in July. Analysts had expected a neutral 50 reading.

But on Wednesday, there were mixed signals, as the ONS reported manufacturing production fell by a worse than expected 0.9% in July, compared to June, but industrial production as a whole was higher.

Today, official stats showed construction was flat in June and July, where experts had expected a drop.

German bank Berenberg and close follower of Brexit said recent data did not suggest the UK was heading for a recession, but that it pointed to continued, albeit sluggish, expansion in economic output.

It reckons the economy will expand by 0.2% per quarter in the third and fourth quarter, up from its previous forecasts of 0.1% per quarter.

"The somewhat resilient post-vote performance does not, however, alter our long-term call that Brexit will lower UK trend growth to 1.8% pa from 2.1%," it said in a note.

It disagrees to the view that the Bank of England reacted prematurely to lower interest rates to steady the ship.

Too early to call on the housing market

This report would perhaps be incomplete without at least a nod to the UK's obsession with housing - and there was corporate news this week on the subject.

Barratt Developments Plc (LON:BDEV) was said to have defied Brexit scaremongers, as it reported that completed home sales were up more than 5% in the year ended 30 June, with pre-tax profit jumping 20% to a record £682mln during the period, up from £566mln last year.

"Whilst the outcome of the EU referendum has increased levels of economic and political uncertainty, the group is in a strong position..," it said.

The message was echoed by online home seller and comparative site firm Zoopla (LON:ZPLA), which said profits for this year were on track to hit the top end of forecasts, thanks to a surge of property listings online, suggesting the market is alive.

Berenberg said it pays close attention the UK house market due to its close links to consumption, which accounts for two-thirds of GDP.

"With just a couple of months’ data, it is too early to call the outlook for the UK housing market after the Brexit vote with any real confidence," it summarised.

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